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Chapter 1

ECON-2120 Chapter Notes - Chapter 1: Mick Jagger, Snoop Dogg, Gucci ManeExam


Department
Economics
Course Code
ECON-2120
Professor
Tyler Francis
Chapter
1

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HW1 ECON 2120 (Sections 21 and 26)
1. Christopher Wallace is trying to decide which artist he wants to collaborate with on
his next album. His manager provides him with the projected profits from
collaborating with 4 different artists: (1) $1.3 million from collaborating with Ice
Cube, (2) $2.2 million from collaborating with Snoop Dogg, (3) $1.9 million from
collaborating with A$AP Ferg, and (4) $4.1 million from collaborating with Mick
Jagger. Given this information, what is the opportunity cost of collaborating with
Mick Jagger?
2. A politician goes on MSNBC and says that there needs to be more regulations on
prescription drugs because “you can never have too much safety.” Are they right or
wrong, and why?
3. Gucci Mane buys several bottles of champagne at the club. He enjoys the first more
than the second, the second more than the third, and the third more than the fourth.
Provide the economic explanation for this.
4. Why are “good” institutions, such as free markets and private property rights,
important? (The answer has to do with how institutions affect incentives)
5. The US can produce 1,000 TVs and 4,000 cars and China can produce 500 TVs and
600 cars. What is the opportunity cost of producing one TV in the US and China?
Who has the comparative advantage in producing TVs?
6. Your friend doesn’t study for their economics class at all and does not understand
the difference between a change in quantity demanded and a change in demand.
How would you explain it to them?
7. Suppose that an ice storm is expected to hit Clemson in two days and that there is
widespread panic that power will be out for a week afterwards. In anticipation of
this event, lots of people in Clemson go to Publix and buy nonperishable, canned
foods. Using the theory of supply and demand, how will this run on nonperishable,
canned foods affect the equilibrium price and quantity of canned foods?
8. Suppose that automobile manufacturers estimate that the price of cars in the future
will exceed the current price of cars. In response, the manufacturers cut back their
current production of automobiles, so they can devote its resources towards
increasing production once the price does go up. Using the theory of supply and
demand, how will this decision by the automobile manufacturers affect the current
equilibrium price and quantity of automobiles?
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