Economics Homework Five Answers - Student Fifteen

IsaacZ

1\. Efficiency is when you are doing the best that you can do to fully maximize your time and money in order to make more money for yourself or for your company. "Elam Whitney maximized everyone's efficiency in the cotton when he invented the cotton gin."

Superb.

2\. A and B are substitutes, X and Y are complements.

Correct.

3\. It would cost me $20 to build a new unit.

Correct again.

4.Steak is a normal good and fast food is an inferior good.

Right again.

5\. The Coase theorem's basic assumption is that when there are no transaction cost everything will be used to its maximum efficiency. This assumption is so important because it shows that everyone will try to perform to maximum efficiency regardless if they are poor or rich.

Good, but seems a bit incomplete in not mentioning how people will bargain in a free market to ensure the most efficient use. (Minus 1).

6\. When a store owners marginal revenue exceeds his marginal cost, he will continue to try to sell more items and make more money.

Correct.

7\. The Coase theorem disaproves of the desirability and of the effect of transaction costs because they limit the maximum efficiency from everyone.

Good, but again incomplete. Needs to tie this into government regulation. (Minus 1).

Overall great work. 68/70.--Andy Schlafly 20:30, 18 October 2009 (EDT)