Attendance/Participation Grades
In each tutorial, you get a mark out of 10
3 for attendance, and 7 for participation
Show up on time, you'll get 3 points; otherwise, you'll get 0
for attendance
on time means you cannot be late for more than 15 minutes
Each time you answer a question, you'll get a +
If your answer is particularly insightful, you'll get an extra +
Participation points:
7 if num(+)
0 if num(+)
num(questions covered)
half of the 2nd highest num(+)
Intermediate values are distributed proportionally
At the end of semester, your 10% grade will be an average of
the marks you get in each tutorial
Chapter 3. Q2
Reintroducing wolves into Wyoming has led to reduced numbers of
cattle, elk, and other animals. This is an example of what economic
principle?
Substitution: more wolves, fewer other animals
Chapter 3. Q6
Some goods are so necessary, there are no substitutes for them.
Gasoline is one such example. No matter what the price, people
still have to travel to work. What are some ways people substitute
out of gasoline when the price increases?
car pools, buses, fuel-e cient vehicles, moving closer to work,
etc.
Chapter 3. Q10
If Mr. Hart really believed that Mr. Big is a mob boss and that his
new job would pay better than all his past easy jobs, then what are
the incentives faced by Mr. Hart over what to tell Mr. Big? How is
this an example of substitution?
Mr. Hart wants to get the knew job, so he's going to say
whatever Mr. Big wants to hear. In doing so, Mr. Hart is
substituting between the probability of getting convicted
(which is higher now because of his confession) and money
paid by the big job
Given the answer to the above question, what problems does this
pose to the jury?
The confession may not be trustworthy, because the police are
essentially paying Mr. Hart to tell them what they want to
hear
Chapter 4. Q36
We always want things we don't have. But, if the grass is always
greener on the other side of the fence, why don't you own the other
side of the fence to begin with? If you like your neighbor's donkey,
why didn't you originally purchase that donkey instead of the one
you have? What economic principle easily explains this puzzle?
Diminishing marginal value
You didn't originally purchase your neighbor's donkey because
its total value is not as high as the total value of your own
But as you consume your donkey, its marginal value
decreases, and so in comparison, your neighbor's donkey
(which you don't consume) would appear to be better
Chapter 4. Q40
It's been observed that students who take a course often report
higher satisfaction levels when the level of tuition they pay is
higher. Paying for a course makes you like it more, says a student.
What would be a better explanation based on the law of demand?
This is called the self-selection issue: only those who really
like a good are willing to pay a high price for it. Thus, when
asked about satisfaction, they are more likely to give high
ratings.
Chapter 4. Q42
Many families in Vancouver make the trek out to a Christmas tree
farm in Langley part of their family Christmas experience. Do you
think that families traveling from Vancouver would be more, or less,
likely to buy the more expensive species of Christmas trees?
The cost of traveling is independent of the price of trees
This makes the relative price of the trees lower
Therefore, families traveling from Vancouver would be more
likely to buy the more expensive trees, other things equal
Chapter 4. Q44
Two kinds of textbooks: new ones cost more than the used ones.
Two students: Emily (who pays no tuition) and Courtney (who
pays full tuition).
Using the law of demand, predict (and explain) which student is
more likely to purchase new books?
Since Courtney pays tuition, the relative price of new textbook
for her is lower.
Thus, everything else being equal, Courtney is more likely to
buy new books
By
everything else equal,
we mean, among other things, that
the budget constraint faced by the two students
for tuition
is the same
after paying
Chapter 3. Review Q4
Is the principle of maximization related to the principle of
substitution?
No. People can still maximize when their preference allows for
zero substitutability between goods.
Chapter 3. Review Q5
How is marginal value related to indierence?
Suppose there are two goods, A and B
marginal value = maximum amount of A you're willing to give
up in return for an additional unit of B
Therefore, MV is that which makes you indierent between
losing MV of A and getting an extra unit of B
Chapter 4. Review Q1
Tom says: Yesterday I went to a movie and the price was $12. Do
you know I have to work 1.5 hours to pay for that movie, and I
could have bought a t-shirt with that money. In this quote, what
is the...
nominal price of a movie: $12
nominal price of a t-shirt: $12
relative price of a movie: a t-shirt
relative price of a t-shirt: a movie
Tom's nominal wage per hour: $8(= 12
1.5)
2
Tom's real wage per hour:
3 of a movie/t-shirt
Chapter 4. Review Q6
What economic idea is present in the following quote:
Let your foot rarely be in your neighbor's house, lest
he becomes weary of you and hate you. (Proverbs 25:17)
diminishing marginal value