Problem #1: Using either a graph or table (Refer to page 22 for help with graphs and tables) use two goods to construct a production possibilities curve.

Clearly explain what a variety of different points on the curve mean. This production curve shows the weighing of producing controllers for X-box ones vs the X-box one produced. If too many controllers are made you don’t have enough X-box ones. This isn’t a one on one relationship because each X-box can use more than one controller.

What would make the curve expand or contract? If the number go outside of the curve efficiency is lost and there become a production imbalance.

Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced? At the extremes you would either produce too many ocntrollers and not enough x-boxes or vice versa.

Problem #2 Part A: Go to the internet auction site eBay® at www.ebay.com and select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural.

How many natural diamonds are for sale at the moment? 216,679 natural diamonds on sale at the moment.

Note the wide array of sizes and prices of the diamonds. The price range was from $4,500,000 to 1 cent. The size of diamonds for sale ranged from .008 carats to 30.45 carats.
In what sense is there competition among the sellers in this market? Most of the sellers are trying to set a price that allows them to get rid of their diamonds as soon as possible.

How does that competition influence prices? Competition for loose diamonds if of the proper rarity will drive up the price of diamonds.

In what sense is there competition among buyers? Some competitors fall into the trap of outbidding competitors due to their emotions getting out of check. Ebay allows repeat buyers to buy as much as they want. This creates familiarity between buyers and can also drive up the prices.

How does that competition influence prices? Competition will drive up the price.

Problem #2 Part B: Describe what would happen if an outside agency determined the prices eBay could charge.

This would depend on how prices were set. If they set the prices too high then the diamonds would be overvalued and not sold. If the price is set too low people wouldn’t get what their diamonds are worth and would seek other avenues to sell their diamonds.

Problem #3: 3. Read the “LAST word” feature on markets for human organs on Pages 62–63 of your text. Next, select a social problem where free markets are not allowed to function and describe how free market features could be introduced to help alleviate the problem. As part of your answer also include a discussion of the risks of introducing market mechanisms in situations where ethical issues are present. Your answer should be approximately two pages long and in APA format.

Decriminalizing Marijuana
Anthony Townsend
GB540 Unit 1
Due 9/23/2014

One of the overwhelming issues overtaking the United States at this time is the continuous efforts to decriminalize medical marijuana. Not since the end of prohibition has a movement existed that is rewriting the laws of social freedom as this. Just like alcohol prohibition ended due to high levels of demand and a never ending supply if needed, marijuana prohibition is about to end.
Two states Washington and Colorado have already passed laws making marijuana use legal. Author Jacob Axelrad wrote “Sixteen states plus the District of Columbia have decriminalized marijuana possession, and two states have legalized retail sales, according to NORML, a group lobbying to legalize the drug. (Axelrad 2014).” Doing this has allowed these states to charge higher than normal taxes thus increasing their tax reserves. As other states witness this most are considering passing similar laws at the least allow citizens to possess, buy and grow limited amounts of medical marijuana if there is a proven need.
The demand and the legalization of medical marijuana in Washington and Colorado has created millions of dollars for dispensaries who distribute the product and growers who manufacture the product. Some counties have even decimalized the possession of marijuana to a small fine thus reducing the finger in the dike task of trying to keep people from doing something that most want to do, and others don’t care either way what they are doing. The hope is to free up resources and law enforcement and courts for more daunting tasks like crimes against society. For some cities like Chicago this is very important money needed to fight more violent crimes. Author Jacob Axelrad also wrote, “"We believe that the implementation of the pot-ticket ordinance in Chicago and other municipalities across the state is uneven, incomplete, unjust and expensive," said Kathleen Kane-Willis, lead author of the study, in May. “The state is failing when it comes to marijuana policy, particularly when considering that a majority of Illinois residents support ticketing for people who have small amounts of marijuana."
That study found that in 2013, between 24,000 and 63,000 hours were probably spent by Chicago police on making misdemeanor arrests for marijuana possession, resulting in costs ranging from $25 million to $116 million. Reducing those arrests by half could save up to $58 million, the study said. And issuing tickets instead of making arrests could raise about $2.9 million for the city, as opposed to the roughly $416,250 that was raised from tickets in 2013 (Axelrad 2014).”
To summarize the supply and demand for marijuana has reached epic proportions. The best bet for all is to tax and regulate the economy of the product through taxes and educational information programs.

Reference:

Jacob Axelrad, Will Illinois be 17th state to decriminalize marijuana? Rahm Emanuel in favor, September 23, 2014 retrieved from http://news.yahoo.com/illinois-17th-state-decriminalize-marijuana-rahm-emanuel-favor-223805021.html