Principles of Economics

Directions:  Click on the "file" item at the top left of the browser window.  Click on "Save as..." from the pull down menu.   Do the necessary reading then answer the questions in the file you just saved.   When you are all done then send me your answers as email.  The best thing to do is to include the file with the questions and your embedded answers as an attachment. Be brief.

NAME:____________________

I. Scarcity and Choice
a. Which comes first, the want or the good? Why?
b. What items in your personal budget are not indispensable? What items in your office budget are indispensable?
c. Why is water so cheap while diamonds are so expensive?
d. In the text the production possibilities frontier is concave. Can you find a pair of commodities for which it is convex?
e. In the sense of the text, do you use all of your resources efficiently?
f. Can you cite examples of specialization and the division of labor in the household?

II. Supply and Demand
a. What is the most you would be willing to pay for an Eagles home game? Is it greater or less than the price at the gate (You can go to their web site to find out the price of a ticket.)? Have you ever bought a ticket from a scalper, for any event? Can you use your answers to explain why the demand curve is downward sloping?
b. What does the supply curve for seats at the First Union Spectrum look like? What does the demand curve for insulin amongst diabetics look like?
c. Must an equilibrium be stable? Is equilibrium a phenomenon we observe in the real world?
d. Is there a freely traded commodity for which you think the laws of supply and demand are inappropriate?
e. Are the laws of supply and demand at work in the offering of courses at Temple University? If not, why not?
f. What are the likely effects of incorrect price ceilings and price floors?