Jared Bernstein: More On Principal Reduction: A New Initiative From the White House That Should Help Clear the Path | Jared Bernstein | On the Economy
Luke Lea Gets It Wrong, I Think: Assessing John Cochrane Can't I Let Sleeping Dogs Lie? Department

ECON 1: SPRING 2012: U.C. BERKELEY: FROM THE (WORLD READABLE) CHATROOM: JANUARY 26, 2012-JANUARY 28, 2012

RUCHIKA GUPTA (Jan 26, 2012 9:24 PM PST) When drawing the supply curve in our homework why do we make steps (a horizontal line and a vertical line) to connect the points as opposed to connecting them by straight lines like in a PPF?

J. Bradford DELONG (Jan 27, 2012 5:58 AM PST) It is because of the way we set up the problem: the supply curve is flat because each producer has a constant opportunity cost of teaching yoga lessons. If they got bored as they taught more lessons--and so needed more money to teach the fifth lesson than the first to make it worth their while--we would have a supply curve without steps.

J. Bradford DELONG (Jan 27, 2012 12:42 PM PST) Re: "how do you calculate opportunity cost if a worker can produce n of one good and 0 of the other. The opportunity cost of the other would be n/0 which is undefined" Would you be happier at saying that the limit of the opportunity cost is infinity as productivity at making the good approaches zero?

THERESA FRUZSINA ANDRASFAY (Jan 27, 2012 7:11 PM PST) I'm noticing this problem set is not only long but the problems each are pretty time intensive. I'm just wondering if the exams are going to be a similar difficulty level.

J. Bradford DELONG (Jan 27, 2012 7:13 PM PST) As I said, the first problem set was double length in an attempt to clear the waitlist. It seems to have worked: at the moment we have 26 available seats and a waitlist of 27...

JOSEPH JAE MIN AHN (Jan 27, 2012 11:31 PM PST) Can anyone tell me where I can find out how to find expected values?

TAI CAO TRAN (Jan 28, 2012 12:17 AM PST) Based on our section, (taken from a worksheet) Expected Value = [probability that the person will be making x item] x [amount of item the person can make]. For example: Greg can make 10 lattes and Dharma can make 2 lattes. The probability that either Greg or Dharma will be making latte is 50% (say they flip a coin to determine who will make latte). So Greg making lattes EV would be 5 (1/2 * 10) vs Dharma making lattes EV would be 2 (1/2 * 1). FYI, I'm still trying to incorporate that to #3 of the problem set.

J. Bradford DELONG (Jan 28, 2012 8:56 AM PST) Remember: expected values are easy because they add: E(a + b) = E(a) + E(b). Expected values are easy because they are just probabilities times outcomes: E(a) = P(a=A) x A, where P() means "probability" and E() means "expected value"

Comments