Homework
I. In the simplest of terms, we can consider a choice to be rational if and when the benefits of that choice are at least as great as its costs (or, conversely, if the costs are no greater than the benefits). Similarly, we say that individuals and organizations operate efficiently if their choices are designed in the best possible way to achieve their objectives while minimizing all relevant costs.
With this in mind, your homework is to write a short essay briefly describing an inefficient work situation you have encountered or observed. As part of your answer, please make sure to discuss how you believe that the situation at hand could have been be improved.
II. Snoopy and Woodstock both need to have some letters typed and some carpets vacuumed. The following table describes how much each of them can accomplish in one hour if that hour is spent either typing or vacuuming:
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Letters Typed in 1 Hour:
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Rooms vacuumed in 1 Hour:
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Woodstock:
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2 letters
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2 rooms
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Snoopy:
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6 letters
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3 rooms
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i. Calculate the opportunity costs of both activities for both Woodstock and Snoopy in terms of what they give up for a unit of each task.
ii. Demonstrate that they could both be made better off by trading tasks and specializing.
III. Consider the following information on the supply and demand of widgets.
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Price (P):
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$27
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$24
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$21
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$18
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$15
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$12
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$6
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$3
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$0
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Quantity Demanded (QD):
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0
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2
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4
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6
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8
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10
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12
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14
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16
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Quantity Supplied (QS):
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16
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14
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12
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10
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8
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6
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4
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2
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0
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i. In this context, using Excel Charts, set up a diagram showing the supply curve, the demand curve, the equilibrium price, and quantity.
ii. Assume that the Government puts in place a price ceiling (i.e., a legal maximum price) of $6 per pound. Carefully explain how this will affect the quantity supplied, the quantity demanded, and the actual amount bought and sold. Specifically, using Excel Charts, set up a diagram showing the supply curve, the demand curve, the price Ceiling, and quantity that will actually be bought and sold in this market.
iii. Assume that the government imposes a price floor of $ 21 per unit in this market. In the context of a supply and demand diagram, show exactly what will happen in the market and how much of a shortage or a surplus this will generate.
iv. Calculate the total revenue received by the seller from actual trade (defined as actual price multiplied by the actual quantity) in this market in the original equilibrium and also under the price controls described in parts b and c above.
Format your homework according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.