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Econ 102 Module 2 Assignment

Student Name:

General Instructions: Please provide your answers to the following in the spaces provided, and
then upload your finished document to WebCampus. Don’t forget to save a copy of your
document before turning it in.

Technical Instructions:
 If you need to draw a straight line: Click Insert, Shapes, select the straight downward sloping
line. At this point, the cursor should change to a + sign. Position the plus sign over the point
where you want to start the line, click and hold the left mouse button, then drag the line to the
point where you want the line to end. Release the mouse. Then you can move the line around
by clicking on the line and adjusting it in various ways.
 If you need to draw a curved line: Click Insert, Shapes, select the shape called "arc." At this
point, the cursor should change to a + sign. Position the plus sign over the point where you want
to start the curved line, click and hold the left mouse button, then drag the line to the point
where you want the line to end. Release the mouse. Then you can move the line around by
clicking on the line and adjusting it in various ways. Clicking on the green handle at the top of
the curve allows you to rotate the curve.
 If you need to draw a label of any kind: Click Insert, Text Box, Simple Text Box. You can
then type inside the box, and move it around by clicking on the handles on the
perimeter of the box.
 If you need to color a line or curve: Right click on the line, select Format Auto Shape, Color.
You can also change the line to a dotted line from this screen as well.

If you are using Open Office or some other word processor, the steps will be quite similar, but
not exactly the same. In any case, do some experimenting and get some help if necessary; and
you will do fine. This is not an art class, and I don’t expect perfection in these matters.

[Each question on this assignment will be assigned point values, for a total of 10 points for this
assignment.]
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1. Donna loves the Seahawks! She has a budget of $45 per month, which she can spend on
Seahawks gadgetry at $5 a piece or on tickets to an autograph signing of Marshawn Lynch,
Bobby Wagner or Russell Wilson at $15 a piece. First draw her budget constraint. How is the
slope determined? Show how her budget constraint changes if the price of the gadgetry
increases to $7.50. Show how her budget constraint changes if the gadgetry stays at $5, but
her monthly income increases to $60. (Hint) Set up a table first with the all or nothing choices
then the intermediate ones. If it easier, please print this up, draw the graphs/tables with a
pencil and scan it back to me for credit. (2 points)

Gadgetry

12

Autograph
Signings
1 2 3 4
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2. Daniel earns $12 per hour at McDonald’s he can work up to 50 hours per week. First, draw
his labor-leisure budget constraint. How is the slope determined? Show how his budget
constraint will change if his wage were to fall to $8 per hour. (2 points)

Income

1200

800

600

400

200

Hours

20 40 60 80 100
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Income

1200

800

600

400

200

Hours

20 40 60 80 100
3. Now let’s imagine Daniel’s income rises to $16 per hour. Draw the labor-leisure budget
constraint. (2 point)
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Income

1200

800

600

400

200

Hours

20 40 60 80 100

4. Would an individual borrowing money at a time when inflation is high or when it is low pay
the higher interest rate? Why? What about an individual borrowing from another individual or
the federal government? Why? (1 point)

5. Using the concepts of opportunity cost, marginal analysis and sunk cost what advice would
you give the following people: (3 points)
A) Dani loves to eat at the buffet at the casino. She gorges herself so that she is sick for
the next two days. She says she does it because it doesn’t cost her anything extra? Your
advice?
B) Layne works for a surveying company that spends $20k on surveys to decide whether
or not to launch a new product or service. Then the company decides it needs to launch the
product or service to earn back the monies spent on the survey. Your advice?
C) Andrea decides her favorite food is In-N-Out Double Double cheeseburgers,
therefore, she decides that she will eat nothing but Double Doubles from here on out. Your
advice?
D) A student has a car to sell. The student spent $500 on tires in the last year. The
student could sell the car for $3000, however, if the student upgraded the car stereo he could
sell the car for $3,500. The upgrade would cost $350. Should the student sell the car as is, or
upgrade the stereo?
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E) Brandy is at a vacation resort in San Diego where a kayaking trip in the harbor was
included in the price for the room. Brandy is deathly afraid of kayaking in the ocean because
she gets sick. But she thinks because she has paid for it, she should go kayaking. Your advice?