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How does the story of long-run equilibrium in a perfectly competitive industry illustrate Adam Smith's invisible hand?
Graph and explain the adjustments to long-run equilibrium when market demand decreases in a constant-cost industry.
Describe what would happen to the industry supply curve and the economic profits of the firms in a competitive industry if those firms were currently earning.
A patent gives a firm a monopoly in production of the patented good. Why do consumers suffer a cost? Is it greater than the profits earned by the monopolist?
Why would a monopolist ever stay in business? Why might it be possible for a monopolist to earn positive economic profits in the long run?
What is meant by the welfare loss of monopoly? Why does no welfare loss occur if a monopolist successfully practices perfect price discrimination?
How can the placement of the vending machines create a monopoly? What if other vending machines are close by and are not owned by Coca-Cola?
Why might the introduction of competition increase the efficiency of these industries?
How might costs differ in these time periods? What would be the effects of charging a higher toll to cross the bridge during busy times?
If Frank's hot dog stand was profitable when he first opened, why should he expect those profits to fall over time?
What must be true of price versus average total cost for such a firm? What will happen to the firm's demand curve as a result of the short-run profits?
Draw a graph showing a monopolistically competitive firm in a short-run equilibrium where it is earning economic losses.
Why do you think buffaloes became almost completely extinct on the Great Plains but cattle did not?
What kind of problems does the government face when trying to perform a cost-benefit analysis of whether or how much of a public project to produce?
How does a TV broadcast have characteristics of a public good? What about cable services such as HBO?
What effects does this clinical competency exam have on the number of veterinarians practicing in the United States?
How would the adverse selection problem arise in the insurance market? How is it like the "lemon" used-car problem?
Why do some majors in college provide more powerful signals to future employers than others?
Why is the winner's curse unlikely for frequently purchased goods? Why would the winner's curse be more likely as the number of bidders increases?
Why does car insurance which explicitly excludes insuring the car for commercial use act to reduce moral hazard?
Why does favoring market mechanisms over command and control mechanisms not mean that a person wants no government whatsoever?
Why would means-tested transfer payments (such as food stamps, in which benefits are reduced as income rises) act like an income tax facing recipents?
Is a gas tax better described as reflecting the ability to pay principle or the benefits received principle? What about the federal income tax?
Why would the benefits received principle be difficult to apply to national defense and the provision of the justice system?
How can you be forced to pay for something you do not want to "buy" in the political sector? Is this sometimes good?