Case study #1:

Government Involvement Enables a Private U.S. Housing Finance Company to Provide "Cheap" Loan

Overall, does it appear that the affordable-housing loans offered by Freddie Mac arise from the application of centralized command and control, the price system, or a mix of the two? Explain your reasoning.

Assume that you and two friends decide to buy an apartment building next to a college. Renters are primarily full-time students. Should you take advantage of the low-interest rate loan? What calculations do you have to make?

Case study #2: There is No Such Thing as Free Parking

Why do you suppose that trying to assess the aggregate opportunity cost of all lands devoted to parking would require determining the opportunity costs of parking spaces by all of the owners of those lands? (Hint: Recall that the opportunity cost is the value of the single next-best alternative as evaluated by each individual who makes a choice).

Assume that you are a homeowner with a parking space. You discover that you can lease the land for $1,000 per year to someone who covets that space. Alternatively, you can build a small basketball court for your personal use. Of the two options, how do you determine which makes you better off?

Case study #3: Explaining a Consumption Shift from Soft Drinks to Bottled Water: Tastes versus Relative Prices

Why might economists find it harder to determine that the demand for an item has changed because of altered tastes and preferences than because of changes in the prices of substitutes? (Hint: Which is directly observable: market prices or people's tastes?)

Are there alternatives to bottled water that you, as a consumer, can purchase in a supermarket?