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If health insurance is optional, would healthy people be more likely or less likely to buy insurance?
Why would you buy collision insurance? If insurance company offers you a large deductible or a no-claim bonus are you likely to take the offer? Why or why not?
Is there an adverse selection problem in a transaction between Mary and an insurance company? Explain why or why not.
Did G.M. sell 6,800 lemons to people who bought the pickups? If G.M. did, what was the private information that it had that buyers did not know?
Judy knows that her car is a lemon and offers it for sale. If the used-car market is working efficiently, will buyers know whether her car is a lemon?
Explain how the Pacific islands' action influences the efficiency of the use of tuna resources and illustrate your answer with a graph of the tuna market.
Is water in the Great Lakes a public good, a private good, or a common resource? What are the goals of the compact? How might they be achieved?
What type of good is a high-speed rail network? Why might it be provided by government rather than privately?
When an oil company receives a permit to develop a particular oil reserve, is that oil reserve a public good or a private good?
If hikers and others were required to pay a fee to use the Appalachian Trail. Why do you think we don't see more market solutions to the tragedy of the commons?
Are China's price controls price floors or price ceilings? Draw a graph to illustrate the shortages of coal and gasoline created by the price controls.
How China's price controls have changed consumer surplus, producer surplus, total surplus, and the deadweight loss in the markets for coal and gasoline.
Explain how the quantity of executives demanded, the quantity supplied, and executive pay will change, and explain why the outcome is inefficient.
Explain how the market for gasoline would react to this price ceiling if the oil-producing nations increased production and drove equilibrium price of gasoline.
What is the government's tax revenue? On a graph, show the excess burden of this tax. Is this tax efficient?
In 2002, New York State raised the cigarette tax by 39¢ to $1.50 a pack. Is this tax on cigarettes a progressive, regressive, or proportional tax?
Draw a graph to show the effects of the $3 tax on the buyer's price, the seller's price, the quantity of cigarettes bought, the tax revenue, the consumer surplu
Explain the effect of this tax cut on the price of gasoline and the quantity bought if, at the same time, the oil-producing nations increase production.
What determines by how much Starbucks will raise its price? How will the quantity of coffee bought in coffee shops change? Will this tax raise much revenue?
Who will pay most of the tax increase: the buyer or the seller? Will the tax increase halve the quantity of sunscreen and sunglasses bought?
Explain how the market for gasoline would react to this price ceiling if a global shortage of oil sent the equilibrium price of gasoline to $3.50 a gallon.
Concerned about the political fallout from rising gas prices. Under what conditions would the price ceiling create lines at the pumps?
How would the amount of work done by lawyers, the consumer surplus of people who hire lawyers, and the producer surplus of law firms change?
On a graph of the market for low-skilled labor, show the effect of the $26 a week increase in the minimum wage on employment of low-skilled labor.
Explain the effects of the higher minimum wage on the workers' surplus and the firms' surplus. Has the labor market become more efficient or less efficient?