On Q #4 from HW #3

For part b of question 4 on HW #3:

4. Savings and interest:

a. How much money should I save each year if I want to have $100,000 saved in 10 years, if I put the money into a savings account earning 5% interest compounding annually? If I can earn 10% in the stock market?
b. How much should I be willing to pay for a $1,000 bond redeemable in 5 years if my personal interest rate is 5%? 10%?

Assume that you will be redeeming the bond for its face value in 5 years, with no payments until then.

Nathan

Christmas?

Some of you may have begun shopping for Christmas. If you really want to bless people this year, you can tell them exactly what you want.
Read this 5 pager for more.

Game Theory at Yale

Find the Yale Game Theory lectures with video here. Really great stuff, and fun.

Also, if you really want to see them again, the Golden Balls videos are here and here.

Enjoy!

HW 3 and some comments

Okay, so we have 2 more class meetings and then a final exam.
Tonight I will discuss a little monopoly (Chapter 8), some oligopoly and game theory (Chapter 10), and perhaps a bit of the economics of time (Chapter 15), Gumballs paper. You should download this paper and read it. It is an easy read.
I have your homework assignment written, and you can download it here.
You should also have read J.D. Rockefeller and the Oil Industry by Burtom Fulsom, Competition (Except where Prohibited by Law) by Thomas DiLorenzo, Occupational Licensure by Milton Friedman, and Outrageous CEO Pay by Hans Sennholz.
For next week you will want to read Bootleggers and Baptists by Bruce Yandle.
Please don't hesitate to email me with questions.
Nathan

Tests are Graded

I just finished grading the tests.
The average (after the curve) was a 75%. That is, 75 was both the mean and the median grade.
The grades were very normally distributed (which is a good thing).
The high was a 105, and the low was a 44.
The distribution is as follows:
F 40's: 1
F 50's: 3
D 60's: 7
C 70's: 6
B 80's: 7
A 90's: 4
A 100s: 1
29 people took the test.
Overall, the grades were lower than the last test, but more concentrated about the mean. The highs grades were not as high, and the low grades were not as low.
See you Wednesday.

Nathan

Midterm 2 Solutions in pdf

I am still grading your tests. There were several good answers on these tests, some which caused me to rethink the problem myself. Posted is one set of solutions. I am grading the tests one problem at a time. The solution to #4 is difficult, and I will be grading this problem more leniently. I wanted to give those who had thought the geometry through a little more to have the chance to show me what they could come up with.
That said, we will cover oligopoly this week, and a bit of review on monopoly, so be sure to have read Ch. 8 and the story of Rockefeller, which is part of the book, Myth of the Robber Barons by Burton Fulsom. You can read a short speech by this author in which he mentions the ideas in this book by clicking here.

Studying for the Exam

1. I told the class that there would be one question on the Hayek paper, and an extra credit question on the Alchian, Demsetz paper. Read this if you have not already.
2. The questions will be similar to those you did for homework, and similar to those in the text.
3. Economics is cumulative.
4. The focus will be on new material from Chapters 5,6,7,14 (13 in the older edition).
5. A lot of people did not turn in Homework 2. Why?
6. Get good rest and carbs and protein before the exam.
Good luck!