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Why might a country be tempted to produce above quota for a year? How do you think other OPEC countries might respond if it did so?
For which product would you expect producers to have a stronger reaction to a ban on advertising: music artists or fast-food burgers?
Compute the interest rate charged by the bank when it is subsidized and when is not. Compute the subsidy dependence index.
Assess arguments for subsidization of microlenders in this particular case. Would you favor write-offs of all potential losses at each stage?
Would you favor subsidization of formal banking activities in this case? For example, will you favor write-offs of all potential losses at each stage?
Explain to your legislator why the state will have to subsidize natural monopolies if this law goes into effect.
Suppose a museum charges different entrance fees for children, students and adults. Explain why the museum price discriminates on admission but not souvenirs.
Which barrier to entry best describes this situation-scarce resources, economies of scale, government intervention, or aggressive tactics?
Why would it be better for Nature's Crunch to lobby the government to relax organic certification requirements or to require grocery stores to clearly label?
Suppose you were evaluating the profit earned by a pharmaceutical company that produces. What information would you need to know to calculate profit?
Suppose that a pharmaceutical company's costs include factory workers' wages. Which of the costs do you expect to be fixed in the short run, and which variable?
Dustin is planning to open a catering business. Give examples of an explicit cost and an implicit cost his new catering business might incur.
Explain why self-employed business owners frequently overestimate their profit levels.
Explain to the firm's manager why the cost that is relevant to this decision is the marginal cost of the next unit of output, and not the average total cost.
Explain why the pharmaceutical industry is characterized by large economies of scale.
A hair salon offers three services: haircuts, color treatment, and styling. If the salon's costs for the month totaled $2,843, what was its profit?
Lisa is a self-employed physical therapist who works from a rented space. If Lisa's profit last month was $2,000, how many clients did she see?
Last year, Jarod left a job that pays $60,000 to run his own bike-repair shop. What is Jarod's accounting profit?
In the pet industry, would you expect the long run to be longer for a pet store or a veterinary clinic?
Describe a private cost, a private benefit, an external cost, and an external benefit that result from your decision to adopt a dog.
What are the private costs and benefits associated with smoking cigarettes? What are the external costs? If smokers paid the social cost of cigarettes.
Why this situation constitutes a negative externality, how it leads to too much irrigation and what it would mean for US farmers to internalize the externality.
Hand washing has external health benefits, helping prevent the spread of communicable. How would it affect the number of people who are sick at any given time?
How might Jimi and his neighbor reach a private solution to their problem? Describe potential problems that might make it hard for a private solution to occur.
Explain to them what the most-efficient tax level will be, and why there are costs to setting the tax too high or too low.