Assignments:
Assignment: 1
1. Why does a consumer's price elasticity of demand for a good depend on the fraction of the consumer's income spent on the good?
2. Why does the elasticity of demand for a good with respect to its own price decline as we move down along a straight-line demand curve?
3. Under what conditions will an increase in the price of a product lead to a reduction in total spending for that product?
4. Why do economists pay little attention to the algebraic sign of the elasticity of demand for a good with respect to its own price, yet pay careful attention to the algebraic sign of the elasticity of demand for a good with respect to another good's price.
5. Why is supply elasticity higher in the long run than in the short run?
Assignment: 2
1. Why do economists prefer to speak of demands arising out of "wants" rather than "needs"?
2. Explain why economist considers the concept of utility useful, even if psychologists cannot measure it precisely.
3. Why does the law of diminishing marginal utility encourage people to spread their spending across many different types of goods?
4. Explain why a good or service that is offered at a monetary price of zero is unlikely to be a truly "free" good from an economic perspective.
5. Give an example of a good that you have consumed for which your marginal utility increased with the amount of if you consumed.
Assignment: 3
Congress increased taxes on cigarettes to deter teenage smokers for smoking. Did this higher tax action on cigarettes really deter teenage smokers? Explain.
Assignment: 4
Is there a difference between line lengths in richer vs. poorer neighborhoods? Explain why if there is a difference.