Short Answer Questions
1. A bumper sticker reads: “Remember: Pillage first, then burn.”How does the humor of this sticker illustrate the idea ofmaximization?
2. “Anything worth doing is worth doing well.” Comment from aneconomics point of view.
3. You have probably heard it said “The grass is always greener onthe other side of the fence.” Presumably this means we always wantthings we don’t have. Indeed, the Hebrew 10th Commandment says “Donot covet (want) your neighbor’s wife, donkey, etc.”. This leads toa puzzle. If the grass is always greener on the other side of thefence, why don’t you own the other side of the fence to begin with?If you like your neighbor’s donkey, why didn’t you originallypurchase that donkey instead of the one you have? What economicidea easily explains this puzzle?
4. A local paper ran the following headline “University EnrollmentUp Despite Economic Hard Times”. Why shouldn’t an economist besurprised at this observation?
5. Why are there so few gas stations in the center of large cities?With such heavy traffic one ought to be able to do an excellentbusiness.
6. In his hit song “Lean on Me”, BillWithers says:

Lean on Me, when you’re not strong,
And I’ll be your friend, I’ll help you carry on
For it won’t be long ’Til I’m gonna need somebody to lean on. . ..
If there’s a load you have to bear
That you can’t carry, I’m right up the road
I’ll share your load, If you just call me . . .
I just might have a problem that you’d understand,
We all need somebody to lean on.
What economic principle is reflected in the lyrics?

7. One of the common traffic rules car drivers must know is howto proceed at a four-way stop. This happens in intersections wheredrivers from all directions must stop and then proceed on a “firstcome, first go” basis; that is, the first person to theintersection goes first, the second person goes second, etc. Ifthere is a tie, the person on the right goes first. Suppose a busyintersection has a four-way stop procedure, is such a rule Paretoefficient?
8. In Canada there is a universal health care system that provides“free” care to citizens and prevents doctors and hospitals fromcharging user fees. Users of the system face large delays inreceiving care and often are on wait-lists for months. On the otherhand, there is no universal health care in the U.S., where no suchwait-lists exist to see a doctor or health care specialists.
Why would universal free care lead to people having to wait?

9. The song “If I had a million dollars” goes
If I had a million dollars
We wouldn’t have to walk to the store
If I had a million dollars
Now, we’d take a limousine ’cause it costs more
If I had a million dollars
We wouldn’t have to eat Kraft Dinner
But we would eat Kraft Dinner
Of course we would, we’d just eat more
And buy really expensive ketchups with it
That’s right, all the fanciest like . . . dijon ketchups
Based on the lyrics, which goods are normal and whichinferior?
10. Consider the demand function Q = 20 - 2P. What are the pointelasticities of demand for
prices between 3 and 8 (consider only integer values)? What are theassociated total revenues?
At which point is total revenue maximized?

Answer rating: 100% (QA)

1The humor of the bumper sticker may illustrate the idea of maximization by poking fun at the idea of maximizing ones own gain even if it involves unethical or destructive behavior The phrase pillage ... View the full answer