BUS 599 week 5

Week 5 - Discussion 1

Markets

To prevent gasoline prices from having devastating effects on the economy it has been proposed that all gasoline prices in the United States be fixed at the average price for the last two years. For simplicity it will be assumed that this price is $2.50 per gallon. When equilibrium prices are under $2.50 per gallon the excess payments will be kept in a government fund. When retail prices exceed $2.50 per gallon money from this fund will be distributed to pay the difference. Do you think that this plan would help the economy? What affect would the plan have on the supply and demand curves? Would gas stations and oil companies be able to stay in business?

Week 5 - Discussion 2

Lemonade Economics

Review the economic statements for this lemonade stand (see page 1 of the Season Three Sample PDF). What do these statements tell you about the operation? Focus on Economic Profits, including Implicit Revenue and Expenses. Explain and support your answer.