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Demonstrate that monopoly is Pareto-inecient. Must it always lead to a lower level of social welfare than competition?
Consider a monopolist operating the underground in Europacity with total cost curve given by c(x) = 15 + 5x. How much economic profit does the monopolist take?
Assuming both parties are risk neutral, which compensation scheme should the government use?
What would happen to an insurance company that decided to sell insurance at the same price to all drivers with the same driving records no matter?
Discuss the argument that paying for human blood has the effect of lowering its average quality because people who are driven by the profit motive.
What are the risks for women and for men who were paying very different rates? Who gains and who loses?
In each case identify the principal (uninformed party) and the agent (informed party) and explain why there is asymmetric information.
Why should the government allow insurance companies to use genetic testing to better assess the health status of their applicants?
What is fair insurance? Why will a risk-averse consumer always buy full insurance when it is fair insurance?
She is the only person who can perform a Nora Jones concert. Does this fact imply that the government should regulate ticket prices for her concerts? Explain.
Will that price lead to the ancient number of crossings? Why or why not? What will be the company's profit or loss? Should it build the bridge?
What would be the effect on total consumption and, especially, for drug consumers in Uganda? What would be the effect on US drug consumers?
If you have a fixed income of $10, how much would you spend on public good? What level of expenditure on the public good maximizes the total level of utility?
What is a public good? How can one determine the ancient level of provision of a public good?
In the United Kingdom the lifeboat service is funded by charitable donations. How can this work? How are the rescue services funded in other countries?
What will be the ancient membership level of a club if there is no congestion? Is it still appropriate to call it a club good if there is no congestion?
How can this fact be used to place a lower bound on their valuation of the countryside?
Four people are considering whether to hire a boat for a day out. Describe questions that will elicit over- and under valuations of the boat hire.
Albert and Beth each have a total of w = 100 to spend. What is the maximum amount that they could pay for the sofa and still both be better o¤ than without it?
Consider three consumers (i = 1; 2; 3) who care about their consumption of a private good. What is the ecient amount of public good for them to consume?
Discuss the historical perspective of the time when the policy was discussed or implemented.
Show that the resulting provision of public good is optimal. Compare your answer with part b, and interpret the difference.
Show that the majority voting outcome is Pareto-ecient if the median marginal rate of substitution is equal to the average marginal rate of substitution.
Discuss the effect that an increase in the number of consumers involved in a mechanism has on the consequences of manipulation.
What would be the equilibrium outcome if both consumers tried to manipulate the Lindahl equilibrium?