Economics Homework Ten Answers - Student Seventeen

JonathanL 12/23/09

1) Externalities are indefinate seen or unseen costs or benefits, monetary or not, to the buyer or seller of the good. Of which those effects can take years to see.

No, that's not it. The externalities are the costs or benefits on people OTHER THAN the buyers and sellers. Pollution is a classic example of a negative externality: it imposes a cost on third parties who breathe the air or swim in the lake, but are not a buyer or seller of the good causing the pollution. (Spelling: "indefinite", not "indefinate") (Minus 2).

2) Marginal revenue is the extra revenue generated by selling one additional unit of a good or service. If your total revenue in maximized, than marginal revenue has to be zero, because no more profit can be generated by selling additional units.

Almost, but the issue is not whether "more profit can be generated," but whether more revenue can be generated. Revenue is any money received, while profit is (revenue minus expense).

3) Question #35 is my favorite of those I answered incorrectly, because I never thought about the possibility of describing faith, an unseen feeling, on a graph, something that can be seen and touched.

Don't follow you concerning question #35, which asked about P=1/Q. Perhaps you meant the extra credit question? At any rate, I do think even unseen quantities can be quantified. People who claim that "dark matter" exists in physics also try to quantify it (personally, I doubt "dark matter" does exist).

4) An example of a positive externality would be someone buying a computer with the knowledge that 10% of that purchase would go towards a cure for a disease. A negative externality includes time wasted in the future by not buying an efficient product.

Not bad, but seems slightly off in the second example. Inefficiency might harm third parties to a transaction, but the main cost would be to the buyer. (Minus 1).

5) Private firms in the free market will not provide public goods simply because they will lost a tremendous amount of profit… Private firms rely charging every individual to make a profit, and if that was no longer the case, most firms would go out of business.

Good.

6) A and B are substitutes, because when price increases for A, demand increases for B. C and D are compliments, because when price for good C increases, demand decreases for D.

Correct, except note spelling: "complement", not "compliment".

57/60. Good work, would have been perfect except for the issue about what an "externality" is. Good initiative in completing prior homework. Merry Christmas!--Andy Schlafly 18:40, 23 December 2009 (EST)