Week 5 Discussion

There are two discussion questions. You will need to answer both questions in order to receive full credit. Please review the Discussion & Peer Review Rubric.

Discussion Questions:

• When cell phones were first introduced, bandwidth was limited, which led to economically interesting pricing structures. One by Spring offered 4,000 free minutes for $39.99 a month. The fine print revealed a catch. Only 350 of those minutes were anytime minutes; the remaining were restricted to evening and weekend usage. If you went over your allotted time, you were charged 35 cents per minute for any additional minutes.
  • What was your marginal cost? Graph it.
  • What would your average variable cost curve for peak time usage have looked like?
  • If you did not keep track of your usage, how would you figure your marginal cost?
  • Why did firms offer such confusing plans
  • Were firms that charged this way in favor of or against portability of phone numbers?
  • Why are these offers no longer prevalent?
• A major issue of contention at many colleges concerns the cost of meals that is rebated when a student does not sign up for the meal plan. The administration usually says that it should rebate only the marginal cost of the food alone, which it calculated at, say, $1.25 per meal. Students say that the marginal cost should include more costs, such as the saved space from fewer students using the facilities and the reduced labor expenses on food preparation. This can raise the marginal cost to $6.00.
  • Who is correct, the administration or the students?
  • How might your answer differ if this argument were being conducted in the planning stage before the dining hall is built
  • If you accept the $1.25 figure of a person not eating, how could you justify using a higher figure of about $6.00 for the cost of feeding a guest at the dining hall, as many schools do?
• There are two discussion questions. You will need to answer both questions in order to receive full credit. Please review the Discussion & Peer Review Rubric. Discussion Questions:
  1. At times we all regret decisions. Does this necessarily mean we did not use the economic decision rule when making the decision?
  2. Research shows that after-school jobs are highly correlated with decreases in grade point averages. Those who work 1 to 10 hours get a 3.0 GPA and those who work 21 hours have a 2.7 GPA. Higher GPAs are, however, highly-correlated with higher lifetime earnings. Assume that a person earns $8,000 per year for working part-time in college and that the return to a 0.1 increase in GPA gives a 10 percent increase in one’s lifetime earnings with a present value of $80,000.
  • • What would be the argument for working rather than studying harder?
    • Is the assumption that there is a trade-off between working and grades reasonable?
  • Post your graph as a jpg attachment to your initial post.