Kaplan Ab224 all discussion

Topic 1 Discussion topic: Scarcity Solutions

Do some research on the country of Ethiopia and discuss:

a. Who in the Ethiopian society has the most difficult time dealing with scarcity?

b. What do they need most?

c. How can their society provide for their wants and needs?

d. Why are they so impoverished?

e. What can their governments do to help, or hinder their country's development?

f. Could not Ethiopia become a world class producer and exporter of goods? How would Ethiopia compare with Japan? Japan is a country relatively POOR in natural resources, yet it is an economic world powerhouse. What are the differences between the two countries?

Topic 1 Discussion topic: Marijuana

There is much discussion in the press about several states moving to legalizing marijuana, either for only medical purposes, or more extremely, for recreational purposes. Looking only at the economic impact (not moral implications) of such changes in the laws, discuss how the existing system of supply and demand for illegal marijuana will be changed with the new legalization.

a. What will happen to existing supply avenues?

b. Will legalization significantly change demand? How?

c. Would one expect prices to change significantly? How?

d. What would be the costs and benefits to governments, both in changes in enforcement requirements and in potential tax revenue?

Topic 1 Discussion topic: Diminishing Marginal Utility

1. Pretend that you have just been surprised with a genuine e-mail that says you have just been selected by your favorite pizza delivery company that every day for the next month you will receive your favorite pizza for lunch and another of that same favorite pizza for dinner, delivered to your home and ready to eat.

a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning.

b. What about your excitement on the 10th day?

c. What about your excitement on the 30th day?

2. Now, pretend that your favorite national brand gasoline company informs you that you have won as much as you want free gasoline, as much as you want, from any of their gas stations, anywhere in the country every day for a year.

a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning.

b. What about your excitement on the 10th day?

c. What about your excitement on the 30th day?

3. Again, considering the concept of utility, what makes these two scenarios different?

Topic 1 Discussion topic: Tailored Clothes

1. Assume that you were ready to buy a custom tailored dress (or men’s suit) and you are prepared to pay up to $200 for it. Also assume that the tailor is prepared to sell that item of clothing for as little as $100.

When you arrive at the tailor shop, the posted price for the item is $150. Discuss how this scenario relates to producer and consumer surplus and how such surpluses, if any, affect buying and manufacturing decisions

2. Discuss any recent purchases you have made and for which you feel that a similar rational seemed to be at work.

Topic 1 Discussion topic: Prescription Medications

Critically analyze the pros and cons of putting a price ceiling on prescription medicine. Make sure to use concepts from the chapter in this unit such as government intervention, inefficiencies, price elasticity, etc. in your answer.

a. In the first case, assume the medication is for a life threatening illness for which your child has been diagnosed.

b. In a second case, assume the medication is for an improved quality of life issue, such as achieving a healthy weight.

c. What are the impacts that the pharmaceutical company that makes the medications in question will experience? How will that affect the pharmaceutical company’s production decisions? What about its decisions to conduct further research into new drugs?

Topic 1 Discussion topic: Increase in Fixed Costs

1. Suppose a business experiences a sudden increase in its fixed costs. For example, suppose property taxes increase dramatically. What impact, if any, will this have on the following:

a. the firm's AFC (average fixed cost);

b. the firm’s AVC (average variable cost);

c. the firm’s ATC (average total cost); and,

d. the firm’s MC (marginal cost)?

2. What changes, if any, is there likely to be in these same cost CURVES?