# eco 204 principles microeconomics week 2

Week 2 DQ

1. Elasticity
• Analyze the determinants of the price elasticity of demand and determine if each of the following products  are elastic or inelastic:
• bottled water
• toothpaste
• fresh green beans
• gasoline

Guided Response: Review the discussion board posts of your classmates. Note their responses to the determinants of price elasticity of demand. Respond to at least two of your classmates. Discuss with your peers the characteristics of an inelastic versus elastic good.

1. Externalities

Explain the difference between a positive and negative externality. In your analysis, make sure to provide an example of each type of externality. Why does the government need to get involved with externalities to bring about market efficiency? What solutions need to be provided for your examples?

Guided Response: Review the discussion board posts of your classmates. What are some of the key differences between positive and negative externality? Respond to at least two of your classmates. Analyze the solutions your classmates offered and compare them to your own. Provide advice to your classmates’ solutions for making the market more efficient.

Assignment

You have been hired by Nobody State University (NSU) as a consultant to help the university with how to increase their total revenue. The university has been struggling in recent years, so they have hired you to help them in their last attempt to find an appropriate solution so that the university can survive.

Raise or Lower Tuition? Suppose that, in an attempt to raise more revenue, Nobody State University increases its tuition.

• Assess a raise in tuition and if it will necessarily result in more revenue.
• Describe the conditions under which revenue will (a) rise, (b) fall, or (c) remain the same.
• Explain the process of revenue at NSU, focusing on the relationship between the increased revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment.
• If the true price elasticity were (-1.2), discuss what you would suggest the university do to expand revenue.
• Using what you have learned in this course, explain how you would resolve this problem if you were the President of NSU.

In a three- to five-page paper (not including title and reference pages), provide subheadings or separate paragraphs for each of the questions listed to help focus your paper for the executives that have requested it. Support your paper with at least two academic sources from the Ashford Library.

You are required to format you paper according to APA style guidelines.