Handout 8-1 (10 points)

What’s Your Bid?

Ask five friends what they would be willing to pay for a biology textbook for a class they will take next semester. Record these amounts in the table below.

Calculate each classmate’s consumer surplus if the price of the textbook is $35. Then, calculate the total consumer surplus.

What’s a New Drug Worth? (3–5 minutes)

Given the idea of consumer surplus, how would you go about assigning a monetary value to the benefit of a new drug on the market that cures autoimmune diseases?

Handout 9-2 (10 points)

What’s Your Minimum Offer Price?

Ask five friends what they would  be willing to accept to sell their  Econ textbook at the end of the semester. Record these amounts in the table below.

Calculate each friend’s  producer surplus  if the  buyback  price  of the textbook is $25 at the campus bookstore. Then, calculate the total producer surplus.

What’s an Internship Worth?

You have the opportunity to do a summer internship abroad for 3 months for a fixed salary of $800 per month, but the costs of rent, food, and travel expenses are not included. What is your producer surplus?

Handout 10-1 (20 points)

Rent Control

What are the pros and cons of rent-control laws?

How is this issue an example of the trade-off between equity (fairness) and efficiency?

How do rent-control laws cause the “market to strike back”?