The following questions must be answered using complete sentences with correct grammar. The news articles referenced in these questions are available to you on Blackboard (and you should read these articles before answering these questions).
The answers to these questions must be your own work. DO NOT COPY AND PASTE any information from these articles or any other source in your answers. This is an academic integrity violation and you will receive a grade of zero. If you would like to use long phrases/full sentences from these articles (or other sources) in your answers, be sure to use quotation marks and an appropriate citation. Moreover, you need to be answering these questions using the concepts covered in ECON 250. Answers to these questions using economic concepts not relating to the material covered in ECON 250 will not be given credit.
One of the first topics we studied this semester was scarcity, and Economics can be defined as the study of how to best allocate scarce resources to satisfy society’s unlimited wants/needs. After reading the NPR article “COVID-19 Hospitalizations Hit Record Highs. Where are Hospitals Reaching Capacity?”, answer each of the following questions no less than 3 complete sentences each:
Given the surge in COVID-19 cases and hospitalizations in many areas across the country, why might it be difficult to allocate scarce resources to where they are most needed (i.e. where these resources may best satisfy society’s needs)?
The relative scarcity of healthcare resources is being exhibited during this pandemic. Typically, prices of goods/services act as the allocator for a good/service (i.e. whoever is willing to pay the price gets the good/service), but that’s not usually the case for healthcare services. So when the need for healthcare resources exceeds the number of resources, what might hospitals be forced to do to allocate these resources?
In chapter 3, we discussed how supply and demand together determine prices for goods and services. Read The New York Times article “Price Gouging Complaints Surge Amid Coronavirus Pandemic”, and discuss each of the following points in a minimum of 3 complete sentences each:
a. Using the supply and demand framework, describe why prices increased for the goods referenced in the article.
b. What are price gouging laws, when do these laws typically go into effect, and why do states implement these laws (i.e. who is the government trying to protect)?
c. If consumers are still willing to purchase the goods referenced in the article after the prices of these goods increased dramatically, are the demands for these goods relatively elastic or relatively inelastic? Justify your answer.
d. Some economists believe that price gougers are doing a service because they are helping to effectively distribute scarce resources by allocating the goods to those who need it most (i.e. those who are willing to pay a high price for the goods). Do you think the sellers mentioned in this article were effectively
helping to distribute scarce resources? (Note: This is an opinion-based question, thus there is no right or wrong answer, but you must support and explain your answer.)
Many restaurants have struggled to make their rent payments during this pandemic. After reading the NPR article“Pandemic Means Closing Time for Many New York City Restaurants and Bars”, answer each of the following questions in no less than 2 complete sentences each:
Explain the difference between fixed and variable costs (see Chpt. 8).
For Nitecap, the bar in Manhattan referenced in the article, is rent a fixed or variable cost? Justify your
Explain why Nitecap (or more generally, many restaurants across the country) began earning a loss (i.e. a
negative profit) during the pandemic even though the costs of operating stayed relatively constant. (Hint: Profit=TR-TC).
One Philadelphia restaurant, Monk’s Café, has decided to shut down temporarily. After reading the article “Monk’s Café in Center City closes temporarily”, explain in a minimum of 3 sentences how this firm’s decision relates to the short-run shut down rule discussed in chpt. 8.
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