Campus bookstores are beginning to enforce policies that discourage students from recording textbook prices so they can compare with books offered for sale online.

Jarret A. Zafran ’09 said he was asked to leave the Coop after writing down the prices of six books required for a junior Social Studies tutorial he hopes to take.

“I’m a junior and every semester I do the same thing. I go and look up the author and the cost and order the ones that are cheaper online and then go back to the Coop to get the rest,” Zafran said.

“I’m not a rival bookstore, I’m a student with an I.D.,” he added.

[Full story here.]

How are bookstores trying to affect the slope of the demand curve for textbooks through these policies? If the Internet makes substitutes more available, what are some ways that booksellers (campus bookstores, textbook publishers) will respond?

Define: surplus, shortage, excess supply, excess demand.

What is the economic case for the practice of what many term "price gouging"?

What signals do price changes send to producers and consumers?

This weekend, Alabama plays the University of Georgia (the "Bulldogs") in Tuscaloosa. Assume that at one hour before the game, it appears that many people want to go to the game but cannot find tickets for sale at the their face value. Verbally and graphically describe this market. Can you graph it? What role are scalpers playing?

Which of the following is a positive economic statement?
a. An increase in the minimum wage will reduce employment.
b. The minimum wage should be increased to reduce poverty.
c. Social conscience demands that we increase the minimum wage.
d. Thoughtful people oppose an increase in the minimum wage.

Which of the following do you think would lead to an increase in the current demand for beef?
a. higher pork prices
b. higher consumer income
c. higher prices of feed grains used to feed cattle
d. widespread outbreak of mad cow or foot-and-mouth disease
e. an increase in the price of beef

Try this exercise (for fun).

Previous test question:

Talladega Superspeedway, which holds almost 200,000 spectators, is in the tiny town of Talladega, Alabama.

(3 points) On the weekend of the big race, hotel rooms in Talladega rent for $300 per night. On non-race weekends, they rent for $50 per night. Why?
(4 points) What happens if the Talladega City Council imposes an “anti-gouging” ordinance that caps the price of rooms at $50 per night?

What must happen for shortages and surpluses to persist?

What socially beneficial results occur when relative prices rise? I.e., what is their effect on consumers and producers? How is this related to Smith's "invisible hand"?

The Opportunity Cost of Corn

Higher relative tobacco prices signal Midwestern farmers to grow tobacco instead of corn. From yesterday's Wall Street Journal:

As laborers from Mexico and Honduras used axes to chop down 6-foot plants and hang them on wooden planks to dry in the sun, Mr. Barbre explained the attraction of the crop. Even factoring in higher labor and other costs, he's netting up to $1,800 an acre from his 150 acres of tobacco, compared with $250 an acre from his corn. He credits tobacco with boosting his annual income by about 35% since he started planting the crop three years ago.

Although corn is flirting with near-record prices at around $4 a bushel, "there's no way corn can get high enough" to compete with tobacco, says Mr. Barbre, shaking his head. "There's just too much money in tobacco."

[Full article here.]

Define command economies. How does the lack of market prices hurt socialist economies? What would happen if I took points away from A students to give to F students, so that everyone would pass this class with a C average?

What are voice and exit? How are they different in the public and private sectors?

"The government should provide goods such as health care, education, and highways because it can provide them free." Is this statement true or false? Explain your answer.

"The economic way of thinking stresses that good intentions lead to sound policy." Is this statement true or false? Explain your answer.

"Positive economics cannot tell us which agricultural policy is better, so it is useless to policymakers." Evaluate this statement.

Which of the following is a positive economic statement?
a. An increase in the minimum wage will reduce employment.
b. The minimum wage should be increased to reduce poverty.
c. Social conscience demands that we increase the minimum wage.
d. Thoughtful people oppose an increase in the minimum wage.

Define the Law of Demand, demand schedule, and demand curve.

Define: substitutes and complements. What are perfect substitutes and perfect complements? How would a change in the price of good A result on the market demand of good B if A and B are complements? Give an example.

Differentiate between changes in quantity demanded and changes in demand. Differentiate between changes in quantity supplied and changes in supply.

What causes the demand curve to shift left or right?

Define: Law of Supply.

True or false: If global warming has the effect of allowing farmers to produce more crops due to longer summers, then the result would be an increase in the quantity supplied of agricultural goods.

What are some factors that affect demand? supply?