Economics 301

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Economics 301

• Lecture 2

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The Economic Naturalist

• Knowing biology makes it possible to discern
  additional pattern and texture in natural
  environments.
• Why, in most species, are males bigger and more
  colorful than females?

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• Most animal species are polygynous.
• Males compete with one another for access to
  females.
• The winners take multiple mates and sire most of
  the offspring to their species.

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Why are the antlers of male elk too big?
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• Very little sexual dimorphism in monogamous
  species.

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Example 2.1. Why do the keypad buttons on
drive-up automatic teller machines have Braille
dots? (Bill Tjoa)
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• Your question must be interesting.
• Your answer must be plausible.

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• Example 2.2. Why are child safety seats required
  in cars but not in airplanes? (Greg Balet)

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What do the items on this list have in common?

• Breaker Morant
• Picnic at Hanging Rock
• The Last Wave
• Strictly Ballroom
• Priscilla, Queen of the Desert
• My Brilliant Career
• Mad Max
• Crocodile Dundee

• Gallipoli
• Moulin Rouge
• Walkabout
• Lantana
• Rabbit Proof Fence
• The Year of Living Dangerously
• Muriels Wedding
• Shine

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Example 2.3. Why are Australian films so good?
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• Criteria for choosing a film to see
• Is it by a well-known director?
• Does it feature a favorite actor or actress?
• Has it gotten rave reviews in the media?
• Word of mouth?

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• The only Australian films with a chance to make
  it in the US market are really good onesthose
  able to generate strong reviews and word of
  mouth.

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• Example 2.4. Why do brides spend so much money on
  wedding dresses, while grooms often rent cheap
  tuxedos, even though grooms could potentially
  wear their tuxedos on many other occasions and
  brides will never wear their dresses again?
  (Jennifer Dulski)

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• To enable the renter to make a fashion statement,
  a rental company would need to offer 40 different
  styles of gown in each size.
• Each gown would be rented only once every 4 or 5
  years.
• To make money, the company would have to charge a
  rental payment that exceeded the purchase price.
• No one would rent.

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• If men are content to wear a standard style tux,
  then two or three suits in each size will do.
• Each suit can be rented 5 or 6 times a year
• Rent about 25 of purchase price

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• Example 2.5. Why are round-trip fares from
  Hawaii to the mainland higher than the
  corresponding fares from the mainland to Hawaii?
  (Karen Hittle)

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• Example 2.6. Why do airlines charge much more for
  tickets purchased at the last minute, while
  Broadway theaters follow exactly the opposite
  practice? (Gerasimos Efthimiatos)

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• Example 2.7. Why do many people buy larger houses
  when they retire and their own children leave
  home? (Tobin Schilke)

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• Example2.8. Why did paper towels replace hot-air
  hand dryers in public restrooms in the 1970s?

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• Example 2.9. Why is airline food so bad?

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• Should I increase the quality of the meals?
• B(x) same as in restaurants on the ground
• C(x) much higher than for restaurants on the
  ground, because of space constraints

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Example 2.10. Why do many manual transmissions
have six forward speeds, most automatics only
four?
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Example 2.11. Why does a telecom-munications
equipment manufacturer offer free BMW sedans to
employees with more than one year of service?
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• BMW lease price was 9000/year.
• Why not give employees 9000/year in extra salary
  instead?

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• The Logic of Gift Giving
• Among each of the following pairs of items
  costing the same amounts, which item would be the
  more suitable gift for a close friend?

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20 worth of Macadamia nuts (12 oz)
20 worth of peanuts (10 pounds)?
or
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A 200 gift certificate for Maison de la Casa
House (one dinner)
A 200 gift certificate for McDonalds (25
dinners)?
or
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30 of Uncle Bens Converted Rice (50 pounds)?
30 worth of wild rice (3 pounds)
or
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• Getting the BMW as a gift eliminates
• guilt feelings about splurging
• any perception that youre trying to impress
  others
• the need to spend the 9000 on kitchen
  improvements and
• the need to explain to your parents why you
  didnt buy the more practical Honda Accord.

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Why do many fast food restaurants post signs like
this?
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• Why do most bars charge their patrons 3 for
  bottled water but give them pretzels and peanuts
  for free?

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• Further examples
• Why do top female models earn so much more than
  top male models? (Fran Adams)
• Why arent NFL kickers paid the same as leading
  scorers in other sports? (Ed Kline)
• Why didnt anyone sign up for Thanksgiving
  dinner? (Anita Lee)