Question 1
Provide an example about how people specializing in their areas of comparative advantage benefits you in your day-to-day life.
Classmate 1
In the automotive industry, they have an assembly line. Each person or machine is specialized in making one piece of a car. This makes the process of making a car quicker and easier to mass-produce. This helps our day-to-day life because it makes cars less expensive to buy because one person didn't have to make a car all by themselves.
Classmate 2
A construction crew felt like a good example to me. If you are having a house built, the person that is responsible for putting the walls up is most likely not the same person who is putting the roof on. Making sure that your construction crew has someone who specializes in each area of a house build will make the process go faster and cause better profits for the company.
Question2
Generally speaking, marginal utility decreases as the number of units consumed increases. Can you think of a product where this decline in marginal utility is particularly sharp? Why is this?
Classmate 1
Two products that have a sharp decline in marginal utility are stoves and microwaves. This is because usually, families only have one stove and one microwave in their homes. Having more than one of either seems a bit too much. Mainly being because they would only really use one stove and in the current time sometimes getting food to go or delivered is more convenient, so they might not use a stove as much. As for a microwave, there would not really be a need for two unless they rather not wait in between items to reheat. Though of course there might be some places that can need more than one stove or microwave.
Classmate 2
I think of tvs as having a very sharp decline in marginal utility. Many people put tvs in their homes for look and shows because it can make the room pop and stand out. Having one or two tvs is reasonable because tvs can be very expensive based on the one you get, but having more than 3 or so can be very excessive and costly since tv services are going up to based on how many tvs a person has in the household.
Question 3
The textbook describes how, over some range of output, economies of scale exist in the production of cars. Provide another example of an industry that experiences economies of scale? What factors lead to these economies of scale?
Classmate1
An example of an industry that experiences economies of scales is supermarkets. For instance, think of Walmart. Walmart, as do other big supermarkets, has a big purchasing power, meaning that they can buy a large quantity of things at one time, or in other words, they can buy things in bulk. And buying things in bulk means that things can be purchased at a lower price. In addition, because they are able to buy things in bulk, they are also able to get delivery fees at a better price. As stated above, the factor that leads to these economies of scale is that supermarkets can purchase material in bulk and reduce the cost of delivery/ transportation.
Classmate 2
When I think of economies of scale, I think of lawncare and landscaping businesses. More like lawncare. In lawncare, they work very hard for most of the year, but during the winter months, these workers and businesses don't have any yards to work on because of the weather brings low demand for lawn care. So all of these workers in the business are hurt because they have nothing to do for those months. As the more lawns you work on, the more workers you need. When the season is done, you have all the workers but no yards.