Econ 215 Fall 2008

Shane Murphy

Main page for the class

Homework is usually due on Wednesdays, but it is fine to turn these in early.
Some of the homework may be in pdf format, click here to download Adobe Acrobat Reader).

Choice 2: Read the debate here.
Who are the economists involved? What are their positions? Where do they agree and where do they disagree? What do you think?
Fall 2008 - Econ 215 - Shane Murphy
Due DateAssignment
HW 0Due Friday, August 29Send me an email with your address. Copy and paste the course requirements and grading sections from the syllabus, and include any questions you have. Watch this video.
HW 1Due Wednesday, September 31. After watching the Authors@Google: Robert Frank video, explain in your own words the three principles that we covered in class and that were discussed in the video: The Scarcity Principle, The Cost-Benefit Principle, and The Not-All-Costs-and-Benefits-Matter-Equally Principle. Also, give one example of your own for each principle.

2. Why might someone who is trying to decide whether to see a movie be more likely to focus on the $9 ticket price than on the $20 she would fail to earn by not babysitting?

3. For each long-distance call anywhere in the continental United States, a new phone service will charge users 30 cents per minute for the first 2 minutes and 2 cents per minute for additional minutes in each call. Tom's current phone service charges 10 cents per minute for all calls, and his calls are never shorter than 7 minutes. If Tom's dorm switches to the new phone service, will Tom be more likely to increase or decrease the length of his calls and why?

HW 2Due Wednesday, September 10 1. Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man's opportunity cost of washing a car? Who has a comparative advantage in washing cars?

2. Consider a society consisting only of Helen, who allocates her time between sewing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses, and each hour she devotes to baking bread yields 8 loaves of bread. If Helen works a total of 8 hours per day, graph her production possibilities curve. Which of the points listed is efficient? Which is attainable?
a. 28 dresses per day, 16 loaves per day.
b. 16 dresses per day, 32 loaves per day.
c. 18 dresses per day, 24 loaves per day.

Suppose a sewing machine is introduced that enables Helen to sew 8 dresses per hour rather than only 4. Show how this development shifts her production possibilities curve.

HW 3Due Wednesday, September 17 1. Give an example not from the book or in class of a pair of goods which are complements. Which are substitutes. Explain why.

2. How would each of the following affect the U.S. market supply curve for corn?
a. The price of fertilizer falls. b. The government offers a new tax break to farmers. c. A tornado sweeps through Iowa.

3. What will happen to the equilibrium price and quantity of apples if apples are discovered to help prevent colds? A fungus kills 10 percent of existing apple trees? Both occur?

HW 4Due Wednesday, September 24 1) Go to and record or calculate the following pieces of data:
The number of people employed,
The number of people unemployed,
The total labor force,
The number of people not in the labor force,
The working age population,
The unemployment rate,
The labor participation rate.
These data are provided in the book for a different date and year. Compare this data to the data in the book. Are thing better? Worse? Why?

2) Go to the BEA page linked here
. In the last 30 years, which quarters did the real GDP decline?
Which quarters did personal consumption expenditures decline?
Which quarters did gross private domestic investment decline?
Which quarters did government consumption expenditures and gross investmenr decline?
In years which the real GDP declined what are the tendencies for consumption, investment, and government spending? Be as specific and detailed as you feel necessary, I expect you to write about a half a page.

HW 5Due Wednesday, October 1Listen to and/or read the fireside chat speech on the banking crisis from March 12, 1933 from FDR here. Read the first three pages of this article by Brad Delong, a macroeconomist at Berkley.
Define the following terms (you may need to look them up in the book or use wikipedia): bank run, certificate of deposite, T-Bill, market risk, federal funds rate, security.
Describe how our current crisis is like a bank run (hint: think about risk perception).
Outline how you would explain the current crisis to a friend or family member.
HW 6Due Wednesday, October 8Read and summarize one economists take on the current financial crisis. For this, print at least the first page of the editorial you use, and type or write your summary. You should write between 1 and 2 pages. Please type it, and save your work, we will extend this assignment next week. You do not have to summarize the whole thing, but rather, show how what we've learned in class applies to the economists' analysis. You should define any terms that the average college student does not know.
You may choose any publication, but avoid blog posts. Authors of economics blogs often write elsewhere as well, so if you wish to use a blogger, use what they've published in a newspaper, magazine, or syndicated-type website (project syndicate, salon, etc). A good place to start is Greg Mankiw's roundup of commentaries here.
HW 7Due Wednesday, October 15 Do one of the following, for extra credit (equal to one hw assignment), do both.
1) Listen to this episode of NPR's This American Life (or read the transcript here). Name up to four different groups who could be blamed. What does the NPR piece say about the guilt and innocence of each group? How about your article from last week? What do you believe?

2) Also listen to this episode. Define money market mutual funds. Why are they important? How is what happened in the past month to these like a bank run? Define credit default swap. Why are they important? How is what happened in the past to these month like a bank run? If the commentary you reviewed discuss either of these, does it add anything to the NPR show? What? If not, does this reflect poorlly on the commentary? Why do banks fear the plan that passed?
HW 9Due Wednesday, November 5Here is the Hans Rosling video from last week. You should watch it, but the homework will be from the readings.
What is the main result of the Harrod Domar model. Why can aid mess with incentives? Give an example. What employment assumption did the model make that it shouldn't have made?
HW 10Due Wednesday, November 19In Class Assignment
Due Wednesday, November 26No class
HW 11Due Wednesday, December 3Choose 1 of the following and write a short (1-2 page) review answering the questions provided. Also address what new challlenges face macroeconomists as discussed in the articles.

Choice 1: Read Easterly's discussion of Collier here.
How does Easterly criticise Collier? Where does he agree with him? How can intervention do good? How can it do bad? Why are economists interested in these issues?