Econ 1

ECON 1 Applications Assignment Paper

This assignment will require you to do a bit of reading and research, so it may take you

longer than the typical homework to complete. Trust me, you don’t want to start it the

night before it is due!

For this assignment, you will be using the Naked Economics text by Charles Wheelan to

understand applications of the concepts we have been learning in class and come up with

some real world examples of your own. Our goal is to think critically in order to connect

what might seem like abstract microeconomics to your everyday life. By the end of it, no

one will feel like asking me, ‘When am I ever going to use this stuff?!’ (Right?)

There are three parts to the assignment – (1) Concept, where you will summarize the

relevant material, (2) Text, where you will draw on examples from the Naked Economics

text, and (3) Application, where you will come up with some relevant examples of your

own.

You will turn in this assignment in stages according to the following due dates (all

submissions done on Canvas through the Applications Assignment Paper module):

January 17th – Submit topic you have chosen

January 25th – Paper draft (must be complete, including all 3 parts described below)

January 30th – Paper peer review

February 3rd – Final paper submission through Turnitin on Canvas

Once you have turned in your completed paper draft, one of your classmates will edit it.

You will also help edit a colleague’s paper as part of the peer review. After taking into

consideration any constructive criticism you will submit your paper through Turnitin for

final grading.

Part 1 – Concept

First, choose one of the concepts from class that interests you from the list below. The

topic you choose is completely up to you. Provide a brief summary of the relevant

models surrounding your topic. This does not need to be more than a page long, plus

relevant graphs if applicable. Think quality, not quantity.

Part 2 – Text

Next, read the related portion of the Naked Economics text listed below and discuss some

examples provided by the author to illustrate the relevance of your topic. If there are

many, you only need to provide two. Again, think quality over quantity here. Another

page is more than enough. Side note: the book is a very interesting read, I highly

recommend you read it in its entirety especially if you decide economics is an interesting

topic to you (it is!).

Part 3 – Application

This is the most important part of the assignment. Here you will come up with two

examples of your topic that you have encountered in your life, and an additional example

from current events.

For example, if your topic is externalities, you might mention (as I would) that your

neighbor provides a positive externality to you with the addition of a beautiful sounding

fountain in their backyard. Make sure you explain the relevance of your example to the

topic. In other words, the fountain provides excess benefits that my neighbor does not

incorporate in his analysis of whether to install it or not. The excess benefits are the

positive externality in the form of beautiful running water sounds that mask the sound of

the freeway. If he thought about the externality provided, he would install one in my

yard as well!

Lastly, provide an example from the real world/current events. For this part I ask that

you find a newspaper, magazine, etc. article (online is fine of course, as long as it is from

a reputable source such as the LA Times or The Economist, and not The Onion) or some

data on your topic. Data should also come from a reputable source, such as the Census,

the Current Population Survey, Statistical Abstract of the United States, the Survey of

Income and Program Participation, the National Vital Statistics Report, the Federal

Reserve Economic Data (FRED), etc. Explain how it is relevant to your topic, and cite

as part of your assignment.

As part of your submission you must also include a link to or copy of the article or data

you have used here for me to review. This is also done in Canvas.

This portion should be a bit longer, approximately two to three pages, since it requires the

most in depth and interesting analysis of your three examples. In total your assignment

does not need to exceed 3-5 pages.

As usual, if you have any questions at all come see me. If you are not sure whether your

data is from a reliable source or your examples are relevant to your topic it is easiest just

to check with me.

No credit will be given for examples we have already used in class - this section of the

paper is your chance to critically analyze and apply your topic to your own life and

current event applications.

Presentation

The final part of this assignment is an optional presentation component worth up to 1%

extra credit toward your final grade. This has the potential to increase your letter grade in

the course.

The presentation should be approximately 5-8 minutes long and cover each of the three

portions of the assignment, with emphasis on the last Application section. The

presentation format is up to you - PowerPoint slides, write on the board or any other

format you like better. Time permitting, be prepared for me to ask questions!

Presentation opportunities will be limited so as to leave time for review before the final

exam, so I encourage you to sign up early if you plan to present and to present in groups

with others who have chosen the same topic as you. The deadline to sign up for a

presentation slot on Canvas is February 1st, after which I will assign slots and groups if

necessary. Presentations will take place the last week of class.

Topics and Reading

All reading assignments here are from the Naked Economics text by Charles Wheelan.

Notice that you do not need to read the entire book to complete the assignment, so it is

easy to share with a classmate if you want to share costs ($10 on Amazon). Questions

underneath each topic are for guidance as you read the section and write up Part 1 of your

paper, but do not need to be the sole focus of your paper.

- Absolute/Comparative Advantage and Trade

o Intro and Ch. 12 – Why does the author claim that the idea that international

trade makes us collectively worse off is wrong?

- Demand, Supply, and Market Prices

o Intro and Ch. 1 – Why is allocating resources without a market/price system,

like with a centrally planned economy, “overwhelmingly difficult” in the long

run? How does the pursuit of maximum utility and/or profits lead to efficient

market outcomes? What is the role of market prices as signals?

- Efficiency and Deadweight Loss

o Intro, Ch. 2 pgs. 46-53, Ch. 4 pgs. 87-103 - What is deadweight loss, and how

does it interfere with the efficiency of our market economy?

- Monopolistic Competition

o Intro, Ch. 1 pgs. 6-18, Ch. 5 pgs 117-121 – What defines a competitive

market? What do consumers and producers maximize in this market?

- Monopoly and Antitrust Policy

o Intro and Ch. 4 – What defines a monopoly market? In what way is the

government a monopoly? What effects do monopolies have on the economy

and innovation?

- Price Discrimination

o Intro and Ch. 1 – What is the role of prices in markets? What are the benefits

of price discrimination and how does it work?

Note that we will learn the following topics after your paper draft (but before the final

draft) is due. They are included because many students find them to be the most

interesting topics. Feel free to choose them but know that you will need to read ahead a

little to write your paper.

- Externalities

o Intro, Ch. 3 – What is an externality? Why is it a problem and how can we

solve it?

- Environmental Economics and Policy

o Intro, Ch. 1 pgs. 6-12, Ch. 2 pgs. 34-39, Ch. 12 pgs. 289-293 – Why do

markets struggle with environmental issues, and how is this related to the

environment as a luxury good? How can we solve these issues?

- Public Goods

o Intro, Ch. 3 pgs. 69-79, Ch. 4 pgs. 80-84 – What defines a public good? Can

markets provide them?

- Asymmetric Information, Adverse Selection, and Lemons

o Intro and Ch. 5 – What are the consequences of asymmetric information in

markets? Can we fix this issue?

- Behavioral Economics

o Intro and Ch. 1 – What is behavioral economics? How do some of its issues

affect our economic models?

- Role of Government – Price Controls and Taxes

o Intro, Ch. 3 pgs 58-62, 67-79, Ch. 4 pgs. 94-103 - What is the significance of

government’s role in solving market failures, enforcing patents, providing

market infrastructures, wealth redistribution, and economic productivity?