ECO 204 Complete Course

Week 1

ECO 204 Week 1 Quiz

Discussion Questions

Taxicab fares in most cities are regulated. Several years ago taxicab drivers in Boston obtained permission to raise their fares 10 percent, and they anticipated that revenues would increase by about 10 percent as a result. However, when the commissioner granted the 10 percent increase, revenues increased by only about 5 percent. What can you infer about the elasticity of demand for taxicab rides? What were taxicab drivers assuming about the elasticity of demand?

Suppose that you observe that total utility rises as more of an item is consumed. What can you say for certain about marginal utility? Can you say for sure that it is rising or falling or that it is positive or negative? When does the law of diminishing marginal utility set in and what does this illustrate about where you should stop consuming if you were eating at an all you can eat buffet?

Week 2

ECO 204 Week 2 Quiz

Discussion Questions

Many states provide firms with an investment tax credit that effectively reduces the price of capital. In theory, these credits are designed to stimulate new investment and thus create jobs. Critics have argued that if there are strong factor substitution effects, these subsidies could reduce employment in the state. Explain their argument. How does this affect the labor market?

In an effort to reduce their total costs, many companies are now replacing paychecks with payroll cards, which are stored-value cards onto which the companies can download employees wages and salaries electronically. If the only factor of production that a company varies in the short run is the number of hours worked by people on its payroll, would shifting from paychecks to payroll cards reduce the firms total fixed costs or its total variable costs?

Week 3

ECO 204 Week 3 Quiz

Assignment Manufacturing Industry Evaluation

As you learned in this chapter, economists sometimes use concentration ratios to evaluate whether industries are oligopolies. In this application, you will make your own determination using the most recent data available. You will also discuss the merits and disadvantages of oligopolies in light of your research.

Go to Concentration Ratios in Manufacturing, click on the PDF of the most recent Economic Census for Manufacturing (NAICS 31-33), and answer the following questions in a two to three page paper written in APA format as outlined in the approved APA style guide.

a. Find the four-firm concentration ratios for the following industries: fluid milk (311511), women's and girl's cut & sew dresses (315233), envelopes (322232), electronic computers (334111).

b. Which industries are characterized by a high level of competition? Which industries are characterized by a low level of competition? Define oligopolies and identify which of the listed industries qualify as oligopolies.

c. Name and describe some of the firms that operate in the listed industries that qualify as oligopolies.

d. Discuss whether or not oligopolies are always bad for society, using examples from the firms you described.

Discussion Questions

A perfectly competitive industry is initially in a short-run equilibrium in which all firms are earning zero economic profits but are operating below their minimum efficient scale. Explain the long-run adjustments that will create equilibrium with firms operating at their minimum efficient scale. Why is a perfect competitive firm associated with efficiency for both consumers and businesses?

Which of the following industries would you classify as an oligopoly? Which would you classify as monopolistically competitive? Make sure in your answer to relate it to the characteristics of the market structures. Explain your answer. If you are not sure, what information do you need to know to decide? Respond to at least two of your fellow students postings. a. Athletic shoes b. Restaurants c. Watches d. Aircraft e. Ice Cream.

Week 4

ECO 204 Week 4 Quiz

Discussion Questions

It has been proposed that toll collection on the Massachusetts Turnpike, a key commuter route into Boston from the west, be discontinued. Proponents argue that tolls have long ago paid for the cost of building the road; now they just provide cash for tax bureaucracy. A number of economists are opposing the repeal of tolls on the grounds that they serve to internalize externalities. Explain this argument and discuss why the government often gets involved when finding solutions for externalities.

Suppose a special tax was introduced that used the value of ones automobile as the tax base. Each person would pay taxes equal to 10 percent of the value of his or her car. Would the tax be proportional, progressive, or regressive? What assumptions do you make in answering this question? Do you think the tax that was imposed either efficient or equitable?

Week 5

Assignment Final Paper

Assume that the potato chip industry in the Northwest in 2007 was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competing in a monopolistically competitive market structure. In 2008, two smart lawyers quietly bought up all the firms and began operations as a monopoly called Wonks. To operate efficiently, Wonks hired a management consulting firm, which estimated a different long-run competitive equilibrium.

Given that the new company is now run as a monopoly, how will this benefit the stakeholders involved, such as the government, businesses, and consumers?

Given the transition from a monopolistically competitive firm to a monopoly, what will be the changes with regard to prices and output in both of these market structures?

What market structure is more beneficial for Wonks to operate in, and will this be the same market structure that will benefit consumers? Explain the reasoning behind your answers.

Discussion Questions

If you were President of the US and you were making decisions on trading, would you rather have a comparative or absolute advantage in trading? Can you have both a comparative and absolute advantage in trading? If so, what if at all would be the benefit for your country to trade with any other country?

For a developing country to grow, it needs capital. The major source of capital in most countries is domestic saving, but the goal of stimulating domestic saving usually is in conflict with government policies aimed at reducing inequality in the distribution of income. Comment on this trade-off between equity and growth. How would you go about resolving the issue if you were the president of a small, poor country?