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Does this mean advertising is economically inefficient? If not, explain how it can simultaneously create value and increase market prices.
Identify some other institutions whose effects on lowering information costs are similar to those of advertising.
Draw the economy's production possibilities before and after a natural disaster that lowers the banana harvest but does not affect anchovies.
Jones and Smith have identical marginal costs for anchovies and bananas. Explain why mutually beneficial trade cannot take place between them.
Under what circumstances would the farmer prefer to get a larger percentage? When might the consumer prefer that the farmer get more?
Why might the school's administration make trades like these illegal even though they leave us both better off?
If, instead of $10, subject A gets $200 to give away, what do you expect will happen to the amount she offers subject B? Why?
Surely we would agree that it is rational to attempt to stay alive, because every day we all do just that. Are suicidal terrorists rational? Why or why not?
Jones graduated college a few years ago and can't find a good job. When I suggested she go back and major in economics this time. Is this behavior rational?
What kinds of competition are allowed in business but not in campaigns for political office and vice versa?
Why are you sure he was acting altruistically rather than selfinterestedly? Are you sure he is acting self-interestedly rather than altruistically?
How would an economist decide on the critical percentage at which the fence should not be built?
Is her conclusion justified? Why? Would economics be wrong if she cut all their pay and they did not try to get away with more loafing on the job?
You conclude that people only require a small wage premium to induce them into risky lines of work. How does selection bias make your conclusion doubtful?
Shopping for prices is a common form of information gathering. Construct a model of shopping behavior that explains these facts.
Between 1992 and 2002, the University of California's stock market holdings underperformed market averages. Identify the economic error in their reasoning.
What sorts of heuristics do people use to avoid the difficulties of choosing among so many vegetables when they shop?
Surprisingly, in both rich and poor neighborhoods street crime falls during those hours. Are people acting rationally when they are friendlier at these hours?
Why would the producers not allow losers to make themselves better off when there is no extra cost to them of allowing it?
Why Can you find evidence that your mistakes may have resulted from your use of an availability heuristic?
How does the existence of money reduce the costs of making transactions, relative to a society based entirely on barter?
Why does Longo use salespeople instead of price tags? Why not just offer cars at a fixed discount under the sticker price?
Explain the Comparative Advantage Theory and how Countries can benefitfrom international trade. What type of economic policy does this theory call for?
If he initially has all is land growing apples, what would be the opportunity cost of growing an orange tree?
Assume that, when run efficiently, each store's maximum daily profits are $25,000. Outline the arguments that support your proposed plan.