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Date Submitted: 02/25/2016 04:13 PM
ECONOMICS 110/112
Assignment #4/Assignment #1 – Suggested Solutions
2015/2016
Due Dates and Notes:
DUE: By Friday January 29, 2:00 PM. Completed assignments should be placed in the slot marked for
your section in the white assignment collection box on the 2nd floor of Dunning Hall. Late assignments
will not be accepted.
Use the Cover Page (download from the Assignments page on moodle) when submitting assignments.
Place diagrams for particular questions with your answers to those questions (not all at the end).
Group Work: Maximum four per group, all students must be registered in the same class. Names (as
they appear on moodle) must be in alphabetical order on the cover page (last names first).
Graded work will be available for pick-up beginning on the afternoon of Friday February 12 in the Econ
Distribution Center, Dunning Hall Room 334. You will require your student card.
This assignment covers material from Chapters 16-19 of the text (Econ 110).
This assignment covers material from Chapters 1, 2, 33 (pp 842-55), 3, and 19 of the text (Econ 112).
True, False, or Uncertain
[48 marks - 6 marks each]
Explain why each of the following statements is True, False, or Uncertain according to economic
principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the
explanation that is important.
110 assignment – first 5 questions – 112 first 5 follow
A4-1. Lorne likes to play heavy metal music in the office while he works and values this activity at $50/day. His
neighbor Ian likes peace and quiet and values it at $30/day. The efficient solution is for Lorne to enjoy
his music.
True.
Because Lorne values the common “aural space” more than Ian does, it is efficient that Lorne gets to
play his music. There is no amount that Ian is willing to pay that would stop Lorne from playing the
music, but Lorne is willing to pay more than Ian is willing to accept to be allowed to play...