ECON-1020 Lecture Notes - Lecture 22: Electric Light, Lawrence Summers, Externality

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rubywoodchuck938

31 Mar 2016

School

Vanderbilt University

Department

Economics

Course

ECON-1020

Professor

Buckles Stephen

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Document Summary

No one in the history of the world has ever washed a rental car -larry summers. There are approximately 40,000 deaths per year in the u. s. resulting from automobile accidents. A) i am in favor of saving 35,000 lives per year. B) i am opposed to saving 35,000 lives per year. C) i do not know whether i favor saving those lives or not. You should be asking about the cost. The cost is this: no one over the age of 65 or under the age of 25 can drive, and no one can drive faster than 50 mph. Some place a value on human life. Each time you add a cost, less people favor saving the 35,000 lives. By the end, only 10% are willing to save the lives. Costs and benefits make a difference, even when it comes to saving lives. We frequently change our minds when costs go up. At the same time, rockefeller center buildings in.

Related Questions

The opportunity cost of going to college is almost never discussed, yet it is quite high, so high that it is seriously impacting the broader American economy. For non-economists, âopportunity costâ is one of the most important concepts in economics. Because of scarcity we only have limited resources, and when we use those resources to do something like go to college, we cannot use them for other things that we also believe are desirable.

By far the most important resource we use in producing goods and services is labor or âhuman capital.â Based on what we pay owners of resources, we can say that roughly two-thirds of all production of goods and services is attributable to direct human effort â work. When kids go to college, they forego entering the labor force in a major, full-time manner. When six or seven percent of the entire American population is in college, that means a significant reduction in work effort occurs because otherwise highly productive persons in the physical prime of their lives are only lightly utilized in making things or providing services.

Today, only slightly over 59 of every 100 Americans of working age actually work, down from almost 66 in 2000. If we had the employment-population ratio of 15 years ago, we would have at least 16 million more working Americans today â an increase of over 10 percent. Our output would be probably the better part of a trillion dollars higher. The push for âcollege for allâ is one reason we have less work effort today (to be sure, the modern welfare state has also lowered work incentives a lot for other reasons).

The college for all crowd says higher education augments oneâs human capital, and we forego output today from working to bolster output tomorrow from more productive workers. And, no doubt, that is sometimes true. We have many productive engineers and accountants who gained important skills in college, for example. But is that necessarily true of all college graduates, particularly when Arum and Roksa tell us that graduating college seniors typically have only marginally better critical reasoning skills that freshman? And when over 40 percent of those entering four year colleges fail to graduate in six years? What if millions of those who do graduate take jobs similar to those without that college education? What if the debt incurred to pay for the college leads many to delay marrying, delay buying houses? There is evidence that to some extent the push for college has led to all of these unintended consequences.

The Federal Reserve Bank of New York has published great work showing that there is a very severe underemployment problem amongst college graduates, and other equally good research demonstrating what many of us have been saying for years: the student financial aid programs such as subsidized student loans, have pushed up the cost of college. Now a sister Federal Reserve Bank, namely Philadelphia, is jumping into the act.

The Philly Fed in a new study shows that high student loan debt is preventing young potential entrepreneurs from starting new businesses â they cannot afford the necessary debt. Opportunity cost again: if I borrow a lot to go to college, I cannot afford to borrow to start a business.

Enrollment in all forms of higher education today are up roughly 50 percent or seven million from what they were in 1990. What if enrollments had only risen proportionate to population growth â we would have three or four million fewer enrolled in college today. Would our nation be better or worse off? No one knows for sure, but the continued rise in the proportion of Americans with a college education has been accompanied by a sharp reduction in the rate of economic growth. I bet we would have fewer underemployed recent graduates. I bet we would have less than 17 percent delinquency rates on college loans, and far less than a trillion dollars in loan debt. I bet we would have a higher rate of labor force involvement and entrepreneurial activity among the young. And I bet we would be spending tens of billions less on higher education, and at least a little bit more on capital goods investment, highway construction, et cetera. In short, I suspect we would have been better off as a nation.

Richard Vedder directs the Center for College Affordability and Productivity, teaches at Ohio University, and is an Adjunct Scholar at the American Enterprise Institute.

Question :

This is a short article discussing the concept of opportunity cost and college. Provide your views on this topic.Do you agree/disagree with the article? Why? What are your thoughts on the current employment landscape of college graduates? Provide any insight on this topic on a specific industry, your own experience, or the experiences of people that you know who have already graduated.

magentalion418

Let's then assume professional roles as we work on this fictional scenario:

It's 2020, and General Foryota Company opens a plant in which to build a new mass-produced hover-craft. This hover-craft will work using E-85 Ethanol, will travel up to 200 mph, and will reduce pollution worldwide at a rate of 10 percent per year. It is likely that when all automobiles in the industrial world have been changed over to hovercrafts, emission of greenhouse gasses may be so reduced that global warming may end and air quality will become completely refreshed.

However, the downside is that during the transition time, GFC's Hover-Vee (only available in red or black), will most likely put all transportation as we know it in major dissaray. Roadways will no longer be necessary, but new methods of controlling traffic will be required. Further, while the old version of cars are still being used, Hover-vee's will cause accidents, parking issues, and most likely class envy and warfare. The sticker price on the first two models will be about four times that of the average SUV (to about $200,000.) Even so, GFC's marketing futurists have let them know that they will be able to pre-sell their first three years of expected production, with a potential waiting list which will take between 15 and 20 years to fill.

The Chief Engineer of GFC commissions a study on potential liabilities for the Hover-vees. The preliminary result is that Hover-vees will likely kill or maim humans at an increased rate of double to triple over automobile travel because of collisions and crashes at high speeds -- projected annual death rates of 100,000 to 200,000. However, global warming will end, and the environment will flourish.

The U. S. Government gets wind of the plans. Congress begins to discuss the rules on who can own and operate Hover-vees. GFC's stock skyrockets. The Chief Engineer takes the results of the study to the Chief Legal Counsel, and together they agree to bury the study, going forward with the production plans. The Chief Project Manager, who has read the study and agreed to bury it, goes ahead and plans out the project for the company, with target dates and production deadlines.

Our class is a team of young lawyers, project managers, engineers, and congressional aides who are all part of the process of helping get this project off the ground. In fact, according to the first letter of your last name, you are the following team:

A-G: Attorney on the GFC team
H-N: Project Manager on the GFC team
0-S: Engineer on the GFC team
T-Z: Congressional Aide

Somebody sent a secret copy of the report to you at your home address. It has no information in it at all, except for the report showing the proof of the increase in accidents and deaths. The report shows, on its face, that the CLO, CE, CPM, and your Congressional Representative have seen copies of this report. On the front there are these words typed in red: They knew â they buried this. Please save the world!

Each of you feel a very loyal tie to your boss and your company/country. You all have mortgages, and families to feed. It is likely if you blow the whistle on this report, you will lose your job and your livelihood. You're not even sure who wrote the study in your envelope or who actually sent it to you.

Now to the task at hand:
Utilizing your profession's code of ethics, what would be your first step? Who would you talk to first? Would you go to the press? Would you go to your boss? Should you do anything at all?

pucewildebeest226

1.
A monopolist faces the following demand curve:

Price Quantity Demanded

$51 1

$47 2

$42 3

$36 4

$29 5

$21 6

$12 7

The monopolist has total fixed costs of $60 and has a constantmarginal cost of $15. What is the profit-maximizing level ofproduction?

A) 5 units
B) 3 units
C) 2 units
D) 4 units
2.
A monopolist faces the following demand curve:

Price Quantity Demanded

$10 5

$9 10

$8 16

$7 23

$6 31

$5 49

$4 52

$3 60

The monopolist has total fixed costs of $40 and a constant marginalcost of $5. At the profit-maximizing level of output, themonopolistâs average total cost is

A) $6.74
B) $9.00
C) $7.50
D) $5.82
3.
A monopoly market

A) generally fails to maximize total economic well-being.
B) generally fails to maximize producer surplus.
C) always maximizes total economic well-being.
D) always minimizes consumer surplus.
4.
For a monopoly, the supply curve is a portion of its
A) none of the above; a monopoly does not have a supplycurve.
B) average total cost curve.
C) marginal revenue curve.
D) marginal cost curve.
5.
A monopoly firm can sell 200 units of output for $36.00 per unit.Alternatively, it can sell 201 units of output for $35.80 per unit.The marginal revenue of the 201st unit of output is
A) $â35.80.
B) $4.20.
C) $â4.20.
D) $35.80.
6.
If a monopolist sells 100 units at $8 per unit and realizes anaverage total cost of $6 per unit, what is the monopolist'sprofit?
A) $800
B) $400
C) $600
D) $200
7.
A monopolist is a price
A) setter, and therefore has no demand curve.
B) setter, and therefore has no supply curve.
C) taker, and therefore has no supply curve.
D) setter, and therefore has no variable cost curve.
8.
To define a monopoly, we cite the following characteristics: (i)The firm is the sole seller of its product. (ii) The firmâs productdoes not have close substitutes. (iii) The firm generates a largeeconomic profit. (iv) The firm is located in a small geographicmarket.
A) (ii) and (iv)
B) All of the above are correct.
C) (i) and (ii)
D) (i) and (iii)
9.
Consider a transportation corporation named C.R. Evans that hasjust completed the development of a new subway system in amedium-sized town in the Northwest. Currently, there are plenty ofseats on the subway, and it is never crowded. Its capacity farexceeds the needs of the city. After just a few years of operation,the shareholders of C.R. Evans experienced incredible rates ofreturn on their investment, due to the profitability of thecorporation.

Which of the following statements are most likely to be true? (i)New entrants to the market know they will earn a smaller piece ofthe market than C.R. Evans currently has. (ii) C.R. Evans is mostlikely experiencing increasing average total cost. (iii) C.R. Evansis a natural monopoly.

A) (ii) and (iii)
B) All of the above are correct.
C) (i) and (iii)
D) (i) and (ii)
10.

Quantity
Price
Total Revenue
Average Revenue
Marginal Revenue
1
$35
$35

2

64
32
29
3
$29

4

17
5
$23

11
6

120

7
$17

-1
8

-7
9

99
11
-13
10

80
8

If the monopolist sells 8 units of its product, how much totalrevenue will it receive from the sale?

You wil have to complete the entries in this table to get ananswer. It is a wothwhile exercise and I encourage you to completethe table.

HINT: (a.) Total Revenue = Price x Quantity. (So for quantity of 3x price of $29 = 87 total revenue)

(b) Average Revenue is the same as Price. (So column 2 and column 4would be the same. Calculate to see if that is correct)

(c) Marginal Revenue = Change in TR divided by change in quantity.(You calculated TR = 87 for Q=3. Thus to find MR for Q = 3, findthe change in TR= 87 - 64 and divided by one).

A) 112
B) It cannot be determined from the information provided.
C) 164
D) 40
11.
What conditions need to be present for a firm to be able to use'price discrimination?'
A) Firm should not be perfectly competitive; the market can beseparated according to different elasticities; items can beresold
B) Firm should be perfectly competitive; the market can beseparated according to different elasticities; resale of the itemsis not possible.
C) Firm should not be perfectly competitive; buyers should havesame elasticities;; resale of the items is not possible.
D) Firm should not be perfectly competitive; the market can beseparated according to different elasticities; resale of the itemsis not possible.
12.
If the government regulates the natural monopoly by asking it tocharge a price that is equal to its marginal cost (P=MC) theregulated monopoly will -------- so instead the government ends upletting it charge a price equal to its ------
A) have a profit; fixed cost
B) have a profit; average cost
C) have a loss; variable cost
D) have a loss; average cost

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ECON-1020 Lecture Notes - Lecture 22: Electric Light, Lawrence Summers, Externality

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