· 1.Pick a good that you like and consume more and more of that same good. As you consume more and more of it, track the total and marginal utility like in the marshmallow example.(below)
• Imagine that you are eating marshmallows. Tell me how much you like the first marshmallow on a scale from 1-10 (with a 10 being the most). What about the 2nd? The 3rd ? The 4th ? • So, what you are telling me is that as you eat each additional marsh mellow your total enjoyment is increasing, but you get less and less enjoyment or utility out of each additional one or at a decreasing rate?
Using the Marshmallow example • Lets say that you like the 1st marshmallow a 9 from our scale of 1-10, and you would give the 2nd an 8 and the 3 rd a 5, the 4th a 3, and the 5th a 1. • If we add up the 9+8+5 etc. that would give you the total utility of 27 or the amount of utility or satisfaction that you get from eating all of the marshmallows. If we look at how much more you enjoy consuming the next one, that is the marginal utility or 8 for the second marshmallow.
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2. Production Costs 1. Fill out the chart below 2. Using the chart, graph the MC and ATC on one graph. 3. What is the relationship between MC and the ATC.
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3. Give a real life Example of a firm for each type of Market Structure – Perfect Competition, Monopolistically Competitive, Oligopoly, and Monopoly.
Questions
1. Cell Phone Market (Make sure to include a graph and an analysis (causation) as well as the assumptions you are making to support your answer for each question.)
A. As the Iphone grows in popularity, what happens to the price and quantity of Iphones?
B. As consumers expect the new Iphone to come out, what happens to price and quantity of the current Iphone model?
C. As more Apple Apps that can only be used only for the Iphone get cheaper, what happens to the price and quantity of Iphones?
D. If Apple parts coming from China cost more money, what happens to the price and quantity of Iphones?
E. The Clothing Market. (Make sure to include a graph and the assumptions you are making to support your answer for each question.)
A. As income falls, what happens to the price and quantity of cloths?
B. As the cost of leather falls, what happens to the price and quantity of leather jackets?
C. As the price of Nike’s increases, what happens to the price and quantity of Reebok?
2. If we impose a tax on cloths, what happens to the price and quantity of cloths?
3. Recently California choose to increase their minimum wage, who are the winners and losers? Why? Make sure to draw a graph to support your answer. What is an alternative solution?
4. What is your opportunity cost of Medicare for all?