MIDTERM PAPER (5 questions)
You have made the decision to pursue higher education. Describe the economist’s view of how a decision like that is made. Using marginal analysis, make sure you evaluate the “rationality” of the decision and explain why the following statement is irrational: “Higher education is priceless, so everyone should pursue a degree no matter the cost.”
Recall your readings about Shaq moving furniture and playing basketball. Use both absolute and comparative advantage to explain the following: Suppose you have one partner for a school project requiring both math and writing skills. If you are better than your partner at both math and writing, does this mean you should be responsible for both parts? Use comparative and absolute advantage to explain.
The Econville News reports the invention of a machine that allows cows to milk themselves. Provide a brief written description/explanation of the effect of this news on the equilibrium price and quantity of milk.
The Econville News reports that drinking at least 8 ounces of milk a day increases bone density 10% over a life time. Provide a brief written description/explanation of the effect of this news on the equilibrium price and quantity of milk.
Consider a time in your life when you have benefited from an externality and a time when you have suffered from an externality. Make sure to clearly describe your role and the type of externality. What is your opinion about the role of government in each of these situations?
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