Q8 A The seaport town of New Monopoly has become extremely p

Q8:

A: The seaport town of New Monopoly has become extremely popular with shipping companies due to its superior location. The port has become so congested that ships must wait hours every day just to dock. This is an example of:

1- marginal analysis.

2- a private good.

3- a recession.

4- market failure.

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B: The mayor of New Monopoly realizes that the congestion at the port costs the shipping companies and his town money. Which decision would NOT move him towards a command economy?

1- The mayor orders the port\\\'s employees to work extra hours.

2- The mayor decides to only allow the five most profitable shipping companies to use the port.

3- The mayor decides to let individual firms and consumers find a solution for the excessive wait time.

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Q9 : You have a part time job that pays $8 per hour. Your manager has asked you to work 4 extra hours on Friday night, but you already have plans for dinner and a movie with a friend on Friday night. Under what conditions will you choose to work on Friday night? Consider the economic way of thinking in answering this question; also assume that you are rational (even if you do not think you are rational) and can afford dinner and a movie.

1-You have already seen the movie that has been chosen for Friday night.

2-You value the Friday night activities more than the extra pay (in terms of marginal benefits, marginal costs, and your utility).

3-You value the extra pay more than the Friday night activities (in terms of marginal benefits, marginal costs, and your utility).

4-You think the Friday night dinner will be expensive.

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Q10: Which of the following decisions is least likely to be well-explained by marginal analysis?

1-Deciding between watching another episode of your favorite TV series and going to bed

2-Deciding how fast to go on the freeway

3-Deciding which college to attend

4-Deciding whether to do more sit-ups at the gym

5-Deciding whether to take a lunch break or knock on another door as a door-to-door salesperson

Solution

(Q8 - A) Option (4)

A market failure occurs when an inefficiency arises, in this case the inefficiency being delays suffered by ships due to port congestion, resulting in higher time and expense.

(Q8 - B) Option (3)

Letting firms and consumers reaching upon a solution is leaving the market to the normal market demand and supply forces. This is a Market economy and not a Command economy.

(Q9) Option (3)

I will work on Friday night if the extra earning will be more important and valuable to me, than the entertainment.

(Q10) Option (2)

A decision on speed of car doesn\'t render itself to a marginal analysis (marginal utility from the last speed picked).