Economics 390

Regional Economics

May I remind everyone that your projects are very important.  As per our syllabus, this final is worth less than half of the big project you are working on.  Plan your time appropriately.

You will need to turn in everything on May 10 in our classroom at 12:00.  I will not be there so be prompt.  Prof. Larson only will be there from 12:00 to 12:10.  You need to submit your final, your last project, any revision of projects that you wish to submit, AND you must complete an evaluation.  They are required so try to complete them quickly so Prof Larson can escape.  University rules state that we must hold class so I am not allow to accept e-mail finals.

Section I:  Introductory Economic Theory

There are currently one thousand producers of greebes, each with economic costs like those shown in diagram A below. (You should know how to label each of the cost curves.) The market demand for greebes is shown in diagram B below.

A.      Plot on diagram B the current market supply curve for greebes and label this curve “S”.

B.     Shade in the appropriate profit (or loss) rectangle in Diagram A and calculate the total amount of economic profit or loss each typical greebe producer will make under these conditions. Fill in the blanks below to aid you in your calculations.

Price (P) received by each greebe producer: $_____ per greebe.

Quantity (Q) produced by each greebe producer: _____ thousand greebes.

Average total cost (ATC) for this quantity (approximate): $ _____ per greebe.

Economic profit (loss) for each unit produced (P – ATC): $______ greebe.

Total economic profit (loss) for each greebe producer: Profit (loss) per unit x quantity produced = $________.

C.     Is the greebe market in long-run equilibrium? Why or why not?

• What is the mathematical equation that represents the equilibrium in a two-good consumer model?  Illustrate with a completely labeled graph.
• How can your answer in the previous problem be expressed with marginal utility?
• What is the intuition behind the previous problems?  i.e.  How would you explain the equilibrium to your grandmother?

• What rule should a company follow when deciding whether to hire another worker?
•  Explain the intuition behind your answer.

•  What rule should a company follow when deciding the mix of capital and labor in the production process?
•  What is the intuition behind your answer?

Section III:  Introduction to Community and Regional Economics

• Development is often used interchangeably with growth.  How are they similar or different concepts?  Be sure to define both.
• Why is the concept of equity important in community economic development?

Section IV:  Growth

In our review of growth theory, we found that sustained economic growth requires continual improvements in technology.  In a short essay suggest ways that our federal government can encourage technological advancement.  Please provide at least three different ways our government can encourage.

Section V:  Economic Development Theory

  Export base multipliers and the extension with input/output analysis matrices was explored in class.  Suggest a possible example where you might use this analysis in your future career.  Provide a detailed description of the data that you will need and how the results might be used.  No numbers or final results, just a description of what you need and how it could be used.

Section VI:  Factor Markets

How has agglomeration on the edge of several communities affected land values and the distribution of laborers.  (For example, West Acres mall, built several miles from the downtown area, has become the center of economic activity.)  When able use economic models discussed in the text.