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How do regulators use Pigouvian taxes to produce efficient outcomes? Describe how tradable pollution permits can be used to address pollution.
Contrast negative and positive externalities. Provide an example of each type of externality.
Explain how the variety of building types that sprung up can be attributed, at least in part, to the potential for moral hazard.
Explain the value of a long tail as a signal, focusing on the general principle that signals must be costly to a strong bird, but even more costly to a weak bir
What is the net benefit of a college education to a Charlie? To a Susan? Does the degree requirement allow the firm to filter out low-quality applicants?
Why is it better for you to pay your roommate by the hour or to pay by the garment? Explain.
What is the equilibrium outcome for this game? What kind of contract should the board offer? What level of effort should the CEO choose?
What can the lawyer expect to receive in either case? Explain the associated principal?-?agent problem. Who is the principal? Who is the agent?
Explain how this new law, designed to reduce adverse selection, might increase the problem of moral hazard.
Explain why the problems of moral hazard caused by tenure are likely to be greater than the problems of adverse selection.
Explain how the existence of a deductible reduces the problems of moral hazard.
Explain why this mandate, standing alone, creates tremendous potential for adverse selection problems.
Explain why the existence of information asymmetries creates an adverse selection problem in the market for speeding ticket insurance.
Explain how these procedures help Toyota deal with the adverse selection problem.
n the 1960s Yale University began offering students an alternative to taking out student. What kind of information problem did the Yale program suffer from?
How can signaling be used to reduce asymmetric information in a market? How can education be used as a signal in the job market?
How can insurance companies mitigate the problems of adverse selection? What is moral hazard? Describe the example of moral hazard in the insurance market.
Suggest a reallocation of labor and capital that will enable the island to produce more fish and coconuts without using more resources.
Suppose that the quality of a car is known to the seller, but not to the buyer. What happens to the number of high-quality cars for sale at that price?
To achieve the socially optimal output, government can use a price-based intervention. Determine the ideal measure for government to use to achieve this goal.
Graph the private demand and marginal cost curves, and determine the price and quantity of movies that will be shown.
What is the main prediction of the Coase theorem? What are the two defining properties of public goods? When is a public good being produced efficiently?
Jill wants to maximize her profit. Determine profit-maximizing quantity of bouquet. From society's standpoint, is Jill overproducing or underproducing bouquets?
Calculate the total surplus to market participants. What happens to the net value created for society by marching band music?
What maximum level of output should it set for leather production? What price would prevail in the marketplace once this quota is in place?