ECON 17 Homework 3 Solutions Prof. McBride, UCI, Winter 2016 1. Answers may vary; here are three examples. Vitamin supplements are a type of credence good because their quality is difcult to discern immediately after use. Many manufactured products, such as tennis shoes, are a type of credence good because it may take some time to learn of the good's quality. The quality of services provided by a property managers may be difcult to discern; unless you have a degree of experience with property managers, you will not know if they are doing a good job. I have seen testimonials used to advertise vitamin supplements. I have not seen testimonials used to advertise tennis shoes or property managers. 2. Remember: a capital good is a good that is produced not for consumption but instead for the production of other goods that are consumed. (a) A screwdriver is physical capital. (b) Your knowledge of how to use software is a type of human capital. (c) A sandwich would normally be classied as a consumption good, and is neither capital nor investment. ((1) A dollar bill is neither capital nor investment. (e) The time spent studying the Torah is investment in religious capital. 3. There are many possible correct answers; here are some of them. The book manuscript was typed on a computer using software, both of which are a types of physical capital. The book was delivered to the bookstore in a truck, which is also physical capital. The knowledge of the economics of religion used to write the book is a form of human capital, as is the knowledge of how to use the software to type the text