Economics
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Microeconomics Question from Walter E. Williams:[]

Write a very short comment on each of the following questions:

  • (a) "Fishing in the ocean leads to too many resources being devoted to fishing." First explain what is meant by "too many."
  • (b) Tourists in foreign countries pay higher prices for a given item than do the indigenous residents.
  • (c) Mechanics tend to charge women higher prices for a given emergency repair than that charged men.
  • (d) Why might it be legal for anyone to give free medical advice but if he is going to charge for medical advice he needs a license.
  • (e) "Thou shalt not plow with an ox and an ass together."

Answer[]

  • (a) WEW-031 part (a)
  • (b) True. Tourists have a more inelastic demand curve than indigenous residents due to time constraints, lack of information, etc. The result is that a higher price will can be charged to tourists without losing a significant amount of tourist demand

added caveat:? THIS IS ONLY IF IT IS EASY TO PRICE DISCRIMINATE. See Stigler's Econ of Info article

  • (c) WEW-029 part (d)
  • (d) The supply of “quality” medical advice free of charge is very limited and is therefore not a threat to the medical profession.
  • (e) There are two main explanations: the combination of the differing animals is either product-reducing (read: inefficient) or cost-increasing, or both. Either way, the combination of animals is profit-reducing. (i) All else equal, using an ox and ass together is less productive than using two oxen or two asses. If you have one ox, the marginal product of adding another ox is greater than the marginal product of adding an ass, and vice versa. (ii) All else equal, using an ox and ass together is more costly than using two oxen or two asses. If you have one ox, the marginal cost of adding another ox is less than the marginal cost of adding an ass (for example, the added cost of yoking dissimilar animals to the same plow).

Other Questions:[]

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WEW Questions 61-80
WEW-061WEW-062WEW-063WEW-064WEW-065WEW-066WEW-067WEW-068WEW-069WEW-070
WEW-071WEW-072WEW-073WEW-074WEW-075WEW-076WEW-077WEW-078WEW-079WEW-080
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