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Homework 3

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  1. Generally speaking, adding an additional bathroom to a home with six bedrooms and one bath would be indicative of which economic theory?
    (Check all that apply)
    a.  principle of change
    b.  decreasing returns to scale
    c.  external balance
    d.  increasing returns to scale
    e.  internal balance
  2. A farmer buys a property adjacent to a residential subdivision on the outskirts of Clarion where there is no zoning.  The farmer decides to raise pigs.   The odor causes the values in the subdivision to fall.  This effect is an example of which of the following economic principles?
    (Check all that apply)
    a.  decreasing returns to scale
    b.  external balance
    c.  conformities
    d.  principle of change
    e.  external diseconomies (externalities)
  3. A developer builds six new properties in an overbuilt market.  She will not be able to sell the properties for as much as the prevailing market prices because of a violation of which of the following economic principles?
    (Check all that apply)
    a.  internal balance
    b.  external balance
    c.  external diseconomies (externalities)
    d.  conformity
    e.  substitution
  4. Prospective buyers that look at the prices of other properties in the subdivision are using which of the following economic principles in deciding what price to offer for a property?
    (Check all that apply)
    a.  opportunity cost
    b. internal balance
    c. conformity
    d. increasing returns to scale
    e. substitution
  5. A developer put gold plumbing fixtures in a lower priced property and was unable to increase the price of the property sufficiently to cover the cost of the fixtures.
    (Check all that apply)
    a.  substitution
    b.  internal balance
    c.  external balance
    d.  conformity
    e.  change

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