Second Homework Assignment

ECON 262-4 (MWF)

Due at the beginning of class on Friday, Sept. 9

 20 pts.

 

Directions:  Copy and paste this into a word document and then type your answers.  Leave the questions - do not delete them.  Make sure you follow the directions for homework assignments provided in the syllabus.

 

Warning: Never copy and paste answers from the notes in the packet, the book or from the internet (on any homework assignment)!  That is not learning.  Use your own words!  I will not give credit for answers that are not your own!

 

1.  California has a “Three Strikes and You’re Out” rule (since 1994) where someone convicted of a third felony would get 25 years to life. Currently, 24 states have some form of “three strikes” legislation.  Empirical studies of Los Angeles data suggest that more police officers have been killed because of this rule (hint:  killed by people who already have 2 felony convictions).

Here is a link to some examples of using the R-I-A-O model.  This is also in your packet.  HINT:  Just chose ONE change in a cost OR ONE change in a benefit.  Make sure that whatever incentive change you talk about follows from the rule change and then the action change follows from your incentive (cost or benefit) change.

a.  What do you think the intended outcome of this rule change is?  (2 pts.)

b.  Using the model we discussed in class (R - I - A - O), explain the unintended outcome that has taken place in California (Los Angeles) - make sure you clearly use the model in your analysis.  I am looking for your logic.  Use the following table below to guide your answer. Make sure you explain any assumptions you make -- and your theory in general. (6 pts.)

 

Rule or Institution Change

Incentives (change in cost or benefit)

Actions

Unintended Outcome

Third felony conviction = 25 years to life.

 

 

More police officer deaths.

For all multiple choice and true/false questions - you must type your answer, such as "a", "b", etc. or  "true" or "false" or it will not count.    All answers not typed in your homework will not count.  (2 pts. each)

2.  The crucial problems of economics are:

a.  Coordination (utilizing scarce resources to make sure the government has enough resources) and choices (people must make choices due to uncertainty).

b.  Coordination (utilizing scarce resources to satisfy wants) and choices (people must make choices due to scarcity).

c.  Coordination (utilizing scarce resources to make sure we use as many resources as we can) and choices (people must make choices due to uncertainty).

d.  Coordination (utilizing scarce resources to satisfy wants) and choices (people must make choices due to uncertainty).

e.  None of the above makes sense.

Answer: 

3. To be considered scarce, an economic resource must be which of the following?

I. Limited

II. Free

III. Desirable (wanted)

 

a.  I only

b.  I and II only

c.  II and III only

d.  I and III only

e.   I, II and III

Answer: 

4. Which of the following goods would be considered scarce?

I. Education

II. Gold

III. Time

 

a.  I only

b.  II only

c.  III only

d.  I and II only

e.  I, II and III

Answer: 

5.  ______________ and _________________ provide incentives and disincentives to people to produce goods that are wanted by individuals in the economy.

 

a.  Profits, losses

b.  Sales, profits

c.  Revenue, losses

d.  Profits, government

e.  None of the above is correct.

 

Answer:

6.  Most economists assume:

a.  That people act purposefully

b.  That people will only do something if they think the costs outweigh the benefits of the action.

c.  That people don't act in their own self interest

d.  That people don't really act, they only react

e.  More than one answer is correct.

Answer: 

7.  Incentives matter:

a.  Only when people are greedy and selfish.

b.  Only in a free market system.

c.  Only in government.

d.  To all human beings regardless of the circumstance.

e.  None of the above make sense.

 

Answer: