Tuesday, September 01, 2009

ECON 292 -- Assignment for 9/2

Please think about the following questions and come to class prepared to discuss your responses to them.

How would you expect to respond if placed in the following situations:

A. Assume you have $100 in spending money. Further assume that you have a date on Friday night. On the date, you have the choice to spend money on food, entertainment, or gifts. Any money you don't spend on the date you can keep to buy whatever else you like.
(1) How much money would you allocate to the date and how much would you keep for other stuff?
(2) Of the money you allocated to your date, how much would you spend on food, entertainment, or gifts?
(3) If the price of entertainment increased, how would your choices change?
(4) If you had $200 instead of $100, how would your choices change?

B. Assume you have a part-time job that pays you $15/hour. If you were given a raise so you earned $17/hour, would you change the number of hours that you worked? If so, would you increase or decrease the number of hours you worked?

C. Assume I offered you the following bet:

I will flip a coin. If it comes up heads, I will give you an A for this class. If it comes up tails I will fail you? Would you take the bet? What if heads got you an A and tails got you a C? Heads A, tails B? What if I let you pick a card from a standard deck of playing cards and any heart got you an A, any diamond got you a B, any spade a C, and any club a D, would you take this bet?

D. Assume you have $6000, if I offered you the chance to invest the $6000 and get paid $10,000 in 10 years, would you make this investment?

Would any of my fellow students not take an automatic A--a one-sided coin flip--if they could?
I'm pretty sure I would, perhaps due to skewed priorities, or a certain lack of faith in the viability in generalized evaluation systems (even while acknowledging the expertise of the system proctor).
Sure I'd take an A, but when paying this much I am still going to show up and try to learn what I am paying for.
I would take the bet and try the coin flip for an A, if not just to say that I did it once.
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