WOFFORD ECO 301 - Lecture Notes

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Economics 301The Economic NaturalistSlide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13What do the items on this list have in common?Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Example 2.10. Why do many manual transmissions have six forward speeds, most automatics only four?Example 2.11. Why does a telecom-munications equipment manufacturer offer “free” BMW sedans to employees with more than one year of service?Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Slide 36Slide 37Slide 38Economics 301Lecture 2The Economic NaturalistKnowing biology makes it possible to discern additional pattern and texture in natural environments.–Why, in most species, are males bigger and more colorful than females?Most animal species are polygynous. Males compete with one another for access to females.The winners take multiple mates and sire most of the offspring to their species.Why are the antlers of male elk “too big”?Very little sexual dimorphism in monogamous species.Example 2.1. “Why do the keypad buttons on drive-up automatic teller machines have Braille dots?” (Bill Tjoa)Your question must be interesting.Your answer must be plausible.Example 2.2. Why are child safety seats required in cars but not in airplanes?” (Greg Balet)What do the items on this list have in common?•Breaker Morant•Picnic at Hanging Rock•The Last Wave•Strictly Ballroom•Priscilla, Queen of the Desert•My Brilliant Career•Mad Max•Crocodile Dundee•Gallipoli•Moulin Rouge•Walkabout•Lantana•Rabbit Proof Fence•The Year of Living Dangerously•Muriel’s Wedding•ShineExample 2.3. Why are Australian films so good?Criteria for choosing a film to see: Is it by a well-known director? Does it feature a favorite actor or actress? Has it gotten rave reviews in the media? Word of mouth?The only Australian films with a chance to make it in the US market are really good ones—those able to generate strong reviews and word of mouth.Example 2.4. Why do brides spend so much money on wedding dresses, while grooms often rent cheap tuxedos, even though grooms could potentially wear their tuxedos on many other occasions and brides will never wear their dresses again? (Jennifer Dulski)To enable the renter to make a fashion statement, a rental company would need to offer 40 different styles of gown in each size.Each gown would be rented only once every 4 or 5 years.To make money, the company would have to charge a rental payment that exceeded the purchase price.No one would rent.If men are content to wear a standard style tux, then two or three suits in each size will do.Each suit can be rented 5 or 6 times a yearRent = about 25% of purchase priceExample 2.5. Why are round-trip fares from Hawaii to the mainland higher than the corresponding fares from the mainland to Hawaii? (Karen Hittle)Example 2.6. Why do airlines charge much more for tickets purchased at the last minute, while Broadway theaters follow exactly the opposite practice? (Gerasimos Efthimiatos)Example 2.7. Why do many people buy larger houses when they retire and their own children leave home? (Tobin Schilke)Example2.8. Why did paper towels replace hot-air hand dryers in public restrooms in the 1970s?Push1. Shake excess water from hands 2. Push start button 3. Rub hands together under hot air Directions:Example 2.9. Why is airline food so bad?Should I increase the quality of the meals?B(x) = same as in restaurants on the groundC(x) = much higher than for restaurants on the ground, because of space constraintsMarginal Benefit of QualityMarginal Cost of Quality(ground)Marginal Cost of Quality(air)Quality$/unitQ*Q*Air GroundExample 2.10. Why do many manual transmissions have six forward speeds, most automatics only four?Example 2.11. Why does a telecom-munications equipment manufacturer offer “free” BMW sedans to employees with more than one year of service?BMW lease price was $9000/year.Why not give employees $9000/year in extra salary instead?The Logic of Gift GivingAmong each of the following pairs of items costing the same amounts, which item would be the more suitable gift for a close friend?or $20 worth of peanuts (10 pounds)?$20 worth of Macadamia nuts (12 oz)A $200 gift certificate for Maison de la Casa House (one dinner)orA $200 gift certificate for McDonalds (25 dinners)?$30 worth of wild rice (3 pounds)or$30 of Uncle Ben’s Converted Rice (50 pounds)?Getting the BMW as a gift eliminatesguilt feelings about splurging;any perception that you’re trying to impress others;the need to spend the $9000 on kitchen improvements; andthe need to explain to your parents why you didn’t buy the more practical Honda Accord.Why do many fast food restaurants post signs like this?“If you don’t get areceipt at the time youpay, we will refund theprice of your meal.”Why do most bars charge their patrons $3 for bottled water but give them pretzels and peanuts for free?Further examples:•Why do top female models earn so much more than top male models? (Fran Adams)•Why aren’t NFL kickers paid the same as leading scorers in other sports? (Ed Kline)•Why didn’t anyone sign up for Thanksgiving dinner? (Anita


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WOFFORD ECO 301 - Lecture Notes

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