Part Two Homework Assignment: Econ. 160

Updated 03/03/03 08:03 AM

Part I. Read the articles from the American Spectator and the New York Times. Consider the following questions:

1. In the absence of charitable organizations, how would the forces of supply and demand respond to a crop failure induced famine?
2. Compare the effectiveness of the market system and charitable organizations in reallocating food supplies? Which do you think will be more effective? Why?
3. What role do changes in price have in the operation of the market system, the forces of supply and demand, and the reallocation of goods from low to high marginal valued uses?
4. What do the relief efforts of charitable organizations do to the normal operation of the market? Are starving people ultimately helped or hurt by relief efforts? Why?
5. Read the article about Sudan. Comment on the following passage using economics principles.

Rather than pour millions more dollars every year into feeding southern Sudan, the United States--which has given $ 45 million in food assistance this year and promises an additional $ 16 million--should intervene along with other Western powers to put in place a meaningful cease-fire, they say.

Part II. Consider the article about price gouging during the Northridge Earthquake.

1. Using the concepts of supply, demand, and equilibrium to discuss what happened to prices immediately after the earthquake.

2. Should the owners of convenience and hardware stores who raised prices after the earthquake be vilified as evil people or hailed as heroes? Why?

3. Compare what would happen if the price were free to respond to changes in supply and demand and prices were constrained.

4. Will the anti-gouging law make people in disaster areas better or worse off? Why?

This assignment is due Monday March 3rd. This assignment should be submitted by email to kenneth.ng@csun.edu .