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What is the difference between horizontal equity and vertical equity? What is the difference between a progressive and a regressive tax?
Explain the rationale for government intervention in the economy in connection with economic efficiency, equity, and the role of merit goods.
How many calls Telephone operators take, and how long they spend on an average call. Would you expect such information to increase productivity?
How might adverse selection cause the amount of work done by the company to fall by more than 10 percent?
Analyze how do piece rates provide incentives to work hard? Why is there not a greater reliance on piece-rate systems?
Who benefited from the protectionism of the Multifiber Agreement? Who suffered? The Multifiber Agreement expired on January 1, 2005.
David Ricardo illustrated the principle of comparative advantage in terms. Now describe a new production plan, with trade, that can benefit both countries.
How is it possible that while there are gains to free trade, some groups are harmed? Which are the groups in the US that are most adversely affected?
Why can a country with an absolute disadvantage in a product have a comparative advantage in that product? Explain.
If property rights to clean air are assigned to the nonsmokers, how might the efficient outcome be obtained?
Explain how a tax on fishing could achieve the efficient outcome. Would you expect that too many fish would be taken out this year?
How might the residents of Marple apply the lessons of Coase's theorem to reduce the amount of time they have to listen to the band?
How do markets work to allocate natural resources efficiently? In what cases will markets fail to give the correct signals for how quickly a resource like oil?
What are the advantages of using taxes on polluting rather than subsidies for pollution-abatement equipment?
Why will a free market produce too much of goods that have negative externalities, like pollution?
Since most customers at such restaurants will not return, does the restaurant have an incentive to develop a reputation for good food?
Explain what a tit-for-tat strategy would be. Is a promise to match any available price a way for one firm to signal that it is playing tit for tat? Explain.
Explain how such a device could serve as a credible threat to deter a U.S. attack. In the movie, the Soviet Union did not inform the United States.
Drawing on the idea of a repeated game, explain why a parent might still punish the child even if doing so really did hurt her more than the child.
Give an example of a game in which only one player has a dominant strategy. What is the Nash equilibrium?
What is a Nash equilibrium? What is the unique Nash equilibrium in the prisoner's dilemma game? Can a game have more than one Nash equilibrium?
Professional sports leagues often have salary caps that limit the amount individual teams. Explain why such a restriction might make the team owners better off.
Firms in perfectly competitive markets do not need to behave strategically. Why not? Why do oligopolists need to behave strategically?
What effect will successful unions have on the level of wages paid by unionized companies? on the capital investment for those companies?
In what sector has union growth been largest? Why might this be so? Has the power of unions in the US economy been shrinking or growing in the last few decades.