Week One Homework

Overview

1. Define Opportunity Cost. What is your opportunity cost for taking this class?
2. Define positive economics and normative economics. Explain if each of the following statements is positive economics or normative economics:

• • The minimum wage should be $15.00 an hour
  • The average compensation package of a sample of 10 Fortune 500 companies was estimated to be $13.5 million
  • Drafts for professional sports like the NBA, NFL, and MLB are a market solution
  • Compared to a History Major an Accounting Major is expected to make significantly more

1. With appropriate examples, explain the change in quantity demanded and the change in demand. (Bonus point for graphical explanation).
2. Refer to the following graph. Define and identify demand price, supply price, consumer’s surplus, and producer’s surplus. Note: for full credit, you must define each term and then identify the point or area on the graph (click here to view the graph).