Answer Key to Study Questions for Test #3

Here's the answer key for the practice problems that can be found on my I-drive.

Please let me know if you think any of these answers is wrong.

1-B, 2-B, 3-B, 4-A, 5-A, 6-A, 7-B,
8-A, 9-A, 10-D, 11-B, 12-A, 13-C, 14-B,
15-D, 16-A, 17-C, 18-B, 19-D,
20-C, 21-B, 22-C, 23-C,
24-C, 25-B, 26-A, 27-C, 28-A, 29-B, 30-A,
31-B, 32-A, 33-B, 34-D

Comments on Problem Set #3

Here are some comments and notes for Problem Set #3

First of all, the example problem from the end of class on Tuesday is available on my I-drive.

Problem 1: Covered that one in class. For those who were not there, well, here's the hint: the price will not go up to $11. We recall from earlier discussions that with a tax, the price goes up by less than the tax. You need to figure out by how much the price will go up. To figure out producer surplus, remember, they have what is leftover after paying the tax.

For problem 3:

A. This should reference problem #2, not problem 1. (I'm sure you can figure that out in context, but I figured I'd clear that up.)

It's fine to do all calculations on one table, whether you use a spreadsheet like Excel or calculate by hand (calculator). Just make it clear on what you turn in where I can find the information. For parts that ask for specifics such as "What is the variable cost to produce 110?" you should clearly write out that the variable cost is $135. Ooops, did I just give you an answer? Well, ok, it's a clue.

In calculating variable cost, for the yogurt, make sure you get both parts: there is the materials cost of 50-cents per cup of yogurt, and a labor cost associated with the number of workers employed. For example, for 110 cups of yogurt the materials cost is 110 x .$.50 and the labor cost for one worker is $80. So the variable cost is $55 + $80 = $135.

"How do I know if I did it right?" You probably did it right if you get the following for 330 cups of yogurt: AVC = $1.95, MC = $8.50.

Finally, the text book should be a good resource. I don't mind answering questions but please, try to figure it out from the text book before you IM me late Wednesday night.

Economics Research Day

The Department of Economics is holding a mini-conference this Friday, November 11 from 9:00 am to 4:00 pm in the HUB Susquehanna Room. This mini-conference is sponsored by the College of Humanities and Social Sciences (CHSS). All faculty and students are warmly invited to attend one or more sessions. A copy of the schedule is available in your class folder on my I-drive.

You will notice that there are two sessions featuring students, one session with two Econ faculty, and finally a session with Dr. George Chressanthus (Econ alum--class of '77, and Director of Central Support, Commercial Analytics/Marketing Operations, AstraZeneca Pharmaceuticals).

If you have any questions about the CHSS mini-conference program, feel free to contact me.

Links for Article Review #2

Assigned reading

Cox, W. Michael and Richard Alm, Have a Nice Day! The American Journey to Better Working Conditions. Federal Reserve Bank of Dallas, Annual Report, 2000, pp. 5-29.

Text version: http://dallasfed.org/fed/annual/2000/index.html

pdf: http://dallasfed.org/fed/annual/2000/ar00.pdf (Only pp. 5-29 are assigned)

Read the article cited above. Many images and diagrams are available only on the *.pdf file. (Click the appropriate link on the page above.)