Davidson
College Mark C.
Foley
Department
of Economics Fall 2002
Due Friday, September 6th,
in class[*]
Short Answers
1.
Define opportunity cost and give an example from your own experience.
2.
Economists are often criticized because their economic models do not fully and
accurately describe the “real world”.
How might economists defend themselves against this charge?
3.
What is the main difference between microeconomics and macroeconomics?
4.
Explain the two main causes of market failure and give an example of each.
5.
Which of the following statements are normative and which are positive? Why?
(a)
Baseball
players make too much money.
(b)
The price of
computer equipment usually starts to fall after it has been on the market for a
long time.
(c)
A $0.50 per
gallon gasoline tax will cause some consumers to shift from using cars to
taking public transportation.
(d)
Charging a
toll on the NJ Turnpike is fair because those who use the turnpike pay for its
construction and maintenance.
6. Go to the library and find at least 5 topics that
economists are currently writing about in academic journals. Choose one article to represent each of your
five topics. At least 2 of the articles
must deal with an issue you did not know economists studied (put an asterisk
before the names of these topics) and at least 2 of them must be published
prior to 1997 (this will require you to go to the stacks on the bottom floor of
the library). For each article, give
the citation in AER format[†]
and a short description (1-2 paragraphs) of what the paper is about (what
questions are the authors trying to answer?), and what the author(s) find (what
are their results, conclusions, and/or policy implications?). I realize that you will not understand all
aspects of the articles, but do not simply copy the abstract. Many articles will deal with several topics,
but you should focus on and summarize only the part of the paper which deals
with the topic you’ve chosen.
Restrict your search to the following journals: American Economic Review (especially
the May issue), Journal of Political Economy, Quarterly Journal of Economics, Review of Economic Studies, Review
of Economics and Statistics, Journal of Economic Perspectives, and Journal
of Economic Literature. You may
have more than one paper from a given journal, but they must be from different
issues of that journal. That is, two
articles from the same issue of the same journal are not allowed. Good ways to find papers: (1) go to the
stacks on the first floor of the library and browse the recent issues, (2) use
“EconLit,” a searchable database of economics literature for which there is a
link on the library website (ask a librarian for assistance) or there’s a link
on my page www.davidson.edu/academic/economics/foley/links.html,
or (3) search “JSTOR” (Journal
Storage), www.jstor.org, which houses
journal issues older than 5 years.
Problems
1. Suppose Brenda
knows the exact value, in terms of money, that she derives from eating
nectarines.
Number of Nectarines Eaten Brenda’s Total Value
1 $1.00
2
2.00
3
2.90
4
3.70
5
4.30
6
4.60
7
4.55
(a)
What is the marginal value to Brenda of eating the fourth nectarine? Of eating the sixth nectarine?
(b)
If nectarines cost $0.50 each, how many will Brenda buy? How many will she buy if they are free?
Textbook Problems &
Applications
1.
Textbook, Ch. 1, #8
2.
Textbook, Ch. 2, #4
Add part (e): using this production
possibilities frontier, describe the idea of “efficiency”.
* Don't forget to write a note indicating whom you worked with, if anyone, giving credit where credit is due.
[†] For example:
*Executive Pay
Jensen, Michael C. and Murphy, Kevin J. “Performance Pay and Top-Management Incentives.” Journal of Political Economy, April 1990, 98(2), pp. 225 – 64. Note that the 98 is in italics and it refers to the volume number of the journal, and the 2 is in parentheses and refers to the issue number of the volume.