A: Quantitative Analysis
Problem # 1: "Demand Analysis" (6 points)
Refer to Figures 5-5 and 5-6 on page 125 (Hellman Textbook). Assume that insurance and valuable property are complementary goods and the insurance premium decreases.
a). Indicate whether a decrease in the insurance premium is an upward or downward movement along the demand curve of security equipment or instead involves an outward or inward shift in the demand curve of valuable property. Explain your answer.
b). Indicate whether a decrease in the insurance premium is an upward or downward movement along the demand curve of property insurance or instead involves an outward or inward shift in the demand curve of property insurance. Explain your answer.
Problem # 2: "Market of Stolen Property" (8 points)
Refer to Figures 5-10, 5-11, 5-12, and 5-13 on pages 129-133 (Hellman Textbook).
a). Assume that information and stolen property are complementary goods and the price of information increases. Please analyze the impact of price of information on the demand/demand curve of stolen property.
b). Assume that one of the costs of doing business (for example material costs) decrease. Please analyze the impact of change in material costs on the supply/supply curve of stolen property.
Problem # 2: "Market for Prostitution" (9 points)
Refer to Figures 7-1, 7-2, 7-3, 7-4, and 7-5 on pages 175-179 (Hellman Textbook).
Assume that pornographic literature and prostitution are complementary goods and the price of pornographic literature decreases. Please analyze the impact of pornographic literature on the market of prostitution.
Assume that pornographic literature and prostitution are substitutes and the price of pornographic literature decreases. Please analyze the impact of pornographic literature on the market of prostitution.
Part B: Summary and Comments
Please write double-spaced summary and comments (three paragraphs typed) on each of the following readings (Each paragraph must contain three sentences and is worth 3 points. Please use Times New Roman, one inch margins, and 12 point font):
Summary & Comments # 1 (9 points)
Read and summarize "Empirical studies of Crimes against Property" (pages 138-141) (Hellman Textbook).
Summary & Comments # 2 (9 points)
Read and summarize "Economic Costs of Prostitution" (pages 171-175) (Hellman Textbook).
Summary & Comments # 3 (9 points)
Read and summarize "Public Policy Options toward the Market for Illegal Drugs" (pages 213-224) (Hellman Textbook).