AED Economics 200
Principles of Food and Resource Economics
Spring, 2004

Homework 1 and Answers

Homework 2 and Answers

Homework 3 and Answers

Homework 4 and Answers

Homework 5 and Answers

Homework 6 and Answers
 

 

 

 

 

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Homework 1

Please hand in the assignment, which can be submitted by groups of two or more students, on Friday, April 11th.  All problems are in the textbook.  Each problem and answer is worth 5 points.

  • Page 23, questions 7, 17, and 18.
  • Page 63, question 7.
  • Page 94, questions 1, 2, 8, and 15.
  • Pages 94-95 (“Working with Numbers and Graphs), questions 4 and 5.

Answers

Answers and limited explanations…

(23)7: Your opportunity cost is your best forgone alternative that you gave up by attending college, this is probably the money you could have made working. You don’t add the cost of your tuition etc. to this sum, or another alternative you gave up, opportunity cost is NOT an additive concept, it is your best lost alternative only.

17: Be careful about your examples of association/causation, this is a concept about stimulus and effect. Superstitions don’t count, we are concerned with events/activities causally related… the assumption being that just because “a” occurred before “b” doesn’t mean that  a caused b to happen.

18. The fallacy of composition is a principle centering on the idea that what is good for one may not be good for the whole. Example: If Jane Doe does her Christmas shopping early, because she wants to beat the crowds this will be “good” for Jane Doe. If everyone decides to do their shopping early this will not be “good” for everyone because shops will be crowded…

(63)7: The PPF responds to two factors: resources and technology. An increase/decrease in resource quantity will cause an increase (outward) / decrease (inward) shift in the PPF. An increase in technological capacity = an “increase” in technology that will lead the PPF to shift outward (increase), inferior technology will have the opposite effect. Events/situations that increase/decrease the efficiency of production do NOT shift the PPF, these relate to the movements of points around (further away from or closer to…) the PPF.

(94)1. False. There is a difference in demand and quantity demanded, but most importantly the price of a good (own price) is NOT a demand shifter, changes in price lead to movement ALONG the demand curve.

2. False. We know nothing about supply, the question itself refers to one possible explanation of why price may have increased.

8. At earlier times there is SURPLUS of seats/tickets available for shows (most people are working/studying), therefore prices fall in order to attract consumers.

15.
a. P inc., Q inc.
b. P dec., Q dec.
c. P dec., Q inc.
d. P inc., Q dec.
e. P inc., Q same.
f. P dec., Q same.
g. P dec., Q dec.
h. P inc., Q inc.
i. P dec., Q inc.
j. P dec., Q dec.
k. P inc., Q dec.

(94-94)4. This question requires you to do a drawing in which the supply curve moves less than the demand curve, but both increase – that is, shift to the right. So your drawing needs to have two S curves (before and after) and two D curves (before and after).

5. Consumer surplus = A+B+C+D+E, Producers surplus = F+G+H+I+J.

 
 

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