In the News: The Real March Madness: Ticket Prices
Ticket prices for Monday's NCAA championship game between UConn and Kentucky look deceivingly cheap - only $47 according to the NCAA's official website. But don't expect to get into AT&T's stadium in Arlington, Texas for that paltry sum. The 79,444 seats are sold out. Scalpers are charging as much as $5,000 for front-row, center-court seats for Monday's finale. Front-row seats in the second tier are going for $866 at on-line resellers; nosebleeds for $325. It's inevitable that one team will lose on Monday - but it won't be the scalpers.
Instructions: Enter your response rounded to the nearest whole number.
(a) What was the initial price of a ticket to the NCAA finals?
(b) At that price there is .
Refer to the "World View" given below:
World View: Secondhand Smoke Kills 600,000 People a Year
Secondhand smoke globally kills more than 600,000 people each year, accounting for 1 percent of all deaths worldwide. Researchers estimate that annually secondhand smoke causes about 379,000 deaths from heart disease, 165,000 deaths from lower respiratory disease, 36,900 deaths from asthma, and 21,400 deaths from lung cancer. Children account for about 165,000 of the deaths. Forty percent of children and 30 percent of adults regularly breathe in secondhand smoke.
Source: World Health Organization
If the average adult produces $105,000 of output per year, how much output is lost annually as a result of adult deaths from secondhand smoke?
Instructions: Enter your response rounded to the nearest whole number.
Output lost: $ billion
If a new home can be constructed for $180,000, what is the opportunity cost of federal defense spending, measured in terms of private housing? (Assume a defense budget of $700 billion.)
Instructions: Enter your response rounded to one decimal place.
In the News: Perpetuating Poverty: Lotteries Prey on the Poor
A recently released Gallup survey confirms the fears of many who oppose government-promoted gambling: the poorest among us are contributing much more to lottery revenues than those with higher incomes. The poll found that people who played the lottery with an income of less than $20,000 annually spent an average of $46 per month on lottery tickets. That comes out to more than $550 per year, and it is nearly double the amount spent in any other income bracket.
The significance of this is magnified when we look deeper into the figures. Those with annual incomes ranging from $30,000 to $50,000 had the second-highest average-$24 per month, or $288 per year. A person making $20,000 spends three times as much on lottery tickets on average than does someone making $30,000. And keep in mind that these numbers represent average spending. For every one or two people who spend just a few bucks a year on lotteries, others spend thousands.
-Jordan Ballor
Source: Acton Institute, www.acton.org, March 3, 2004. Used with permission.
What percentage of income is spent on lottery tickets by
(a) A poor family with an income of $17,000 per year who purchase the average amount of lottery tickets for their income bracket?
Instructions: Enter your response rounded to two decimal places.
(b) An affluent family with an income of $42,000 per year who purchase the average amount of lottery tickets for their income bracket?
Instructions: Enter your response rounded to two decimal places.
Assume that the product depicted below generates external costs in consumption of $3 per unit.
(a) What is the market price (market value) of the product?
(b) Draw the social demand curve.
c) What is the socially optimal output?
(d) By how much does the market overproduce this good?