Economics Homework Eleven Answers - Student Eight

Economics Homework Eleven

Duncan B.

1. When you loan somebody money, you are taking a risk that they may not return it. You want to get a little extra cash in return for the possibility that they will not repay it.

Superb.

2. You would pay 1,102.5.

Correct, but need a dollar sign in front. Always be sure to include "units" in science and economics answers.

3. A bus to Washington D.C. is a fixed cost, because the price of renting a bus does not vary.

Right.

5. Interest is compounded annually, therefore at the end of the year you recalculate amounts. To discover the amount paid in the second year, you use the following method: Divide $1000 by 1.1, result $909.09. You divide again, result $826.34.

Correct reasoning, but wrong answer. The correct answer is $826.45. My guess is that your ".3" is a typo, when you meant to type ".4". I wouldn't take off for a typo, but the rounding is also wrong: the cents should be rounded up properly to "5". (Minus 1).

6. Question #33 is a rather hard question, because you have to look carefully at it. The correct answer is (d) because as the product increases in price, factories produce more, which means hiring more workers.

Excellent. It does help to be patient and careful with economics questions. I find the entire topic to be slightly counter-intuitive, perhaps because the market is the result of two opposite forces: the buyers and the sellers.

7. Economic rent is the amount charged above and beyond a good's normal price due to a very limited supply. For example, Dennis Tito, the first space tourist, paid $20 million to spend a few days on the Mir space station, because supply was extremely limited.

Excellent, with a superb example.

8. When output is lowered, the price of goods rises. This is equivalent to price-fixing: it decreases the supply and increases the price per good.

Right.

9. I like the concept of the invisible hand: one of mankind's great flaws--greed--is turned for the benefit of society.

Terrific, concise way of putting. Could use as a model.

Well done, with some terrific answers. Check your math again on the only one you lost a point for, and complain here if you still disagree. 79/80. Congratulations.