Question:
Instructions: (see course schedule for all due dates)
Participation in this forum consists of a minimum of three posts:
One original post (OP) that addresses one of the following discussion prompts provided below. The OP should be 1-2 paragraphs.
Instructions: (see D1 Forum instructions)
Remember to think like an economist and apply the tools and concepts used in class when answering.
Prompts:
(Real World Elasticities) Consider the table below that shows different real-world elasticities. What do you think is the main determinant affecting each good's elasticity of demand (e.g., eggs are inelastic because they represent a small portion of a consumer's budget)
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Product
|
Price Elasticity of Demand (abs. value)
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Eggs
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0.1
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|
Beef
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0.4
|
|
Stationary
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0.5
|
|
Gasoline
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0.5
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|
Housing
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1.2
|
|
Restaurant meals
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2.3
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|
Airline travel
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2.4
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|
Foreign travel
|
4.1
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(Production) A production function shows the relationship between inputs and an output. Consider a short-run production function for your own academic success. What would you measure as the output? Describe at least four inputs that would affect your academic success and explain if they have a positive or negative effect.
(Profit-Max) In nearly all instances of producer theory, we assume that firms maximize profits. Do you think this is a realistic assumption - why or why not? Does it depend on the size of the firm? What else might a firm be maximizing?
(Cola Wars) Coca Cola and Pepsi (close but not perfect substitutes) have been entrenched in the cola wars since the 1970s. In 2006, three Coca Cola employees offered Pepsi a stolen copy of Coca Cola's recipe in hopes of a significant monetary exchange. However, Pepsi refused, turned over the recipe back to Coca Cola (and subsequently the FBI) and the three employees were put in jail. Using the competitive model, explain the economic rationale behind Pepsi's decision to not leak Coca Cola's secret recipe to the public.