HW1 SS12020ECON125 1. Please define the following and give an example from the colonial era:

a. Complementary goods b. Substitute goods c. Import substitution goods d. Mercantilism e. The free rider problem f. Tragedy of the commons

Please answer the following multiple-choice questions:

2. Property rights and territorial hunting rights: a. had little bearing on the depletion of the beaver in 1700s. b. were lacking and thereby crucial to depletion of the beaver in the 1700s. c. could have provided incentives against overharvest of the beaver in the 1700s d. Both b and c are correct. e. None of the above are correct.

3. If a product exhibits decreasing returns to scale, then the average cost of making

the product will ______ as its production increases? a. Increase. b. Decrease. c. Remain the same. d. There is insufficient information provided to ANSWER the question.

4. If a product exhibits increasing returns to scale, then the average cost of making the product will ______ as its production decreases?

a. increase. b. decrease. c. remain the same. d. there is insufficient information provided to answer the question.

5. According to the principle of comparative advantage, a. a country will benefit by specializing in the production of goods in which it has a relatively lower cost of production. b. a country will benefit by specializing in the production of goods in which it has a relatively higher cost of production. c. a country will benefit by importing goods in which it has a relatively low opportunity cost. d. a country will benefit by becoming economically self-sufficient.

Please answer the following short response questions. Please use at least 4 complete sentences for each question (more is okay):

6. How would you describe the market for indentured servants; as a monopoly, an oligopoly, or a competitive market? Justify your answer (why).

7. Suppose the only input in agriculture is time and the following chart depicts the time it took for the Middle Colonies and New England to produce barley and milk. Using the principle of comparative advantage, what would be the most efficient solution? Justify your answer (this one will require some math and a bit of research about comparative advantage).

Time Required to Produce:

Time to produce:

New England

Middle Colonies

1 ton of barley 4 hours 5 hours 1 ton of milk 3 hours 6 hours