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What happens to the marginal rate of substitution as a firm increases the use of one input, keeping output constant? What accounts for this?
Demonstrate the effect of the following on demand and supply in the short run and the long run.
Why is the long-run market supply curve upward-sloping in an increasing-cost industry?
How is a firm's marginal cost curve related to the market supply curve? Draw the ATC, AVC, and MC curves for a typical firm.
Graphically demonstrate the quantity and price of a perfectly competitive firm. Why is a slightly larger quantity not preferred?
What will be the effect of a technological development that reduces marginal costs in a competitive market on short-run price, quantity, and profit?
Draw marginal cost, marginal revenue, and average total cost curves for a typical perfectly competitive firm and indicate the profit-maximizing level of output.
1. Why must buyers and sellers be price takers for a market to be perfectly competitive? List three conditions for perfect competition.
How firms in the United States use relatively less labor and relatively more land than Japan for the production of similar goods, yet both are behaving.
How does a technological innovation affect your analysis? How does the increase in the price of the input on the x-axis affect your analysis?
A perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity produced, how much does the firm produce? Why?
What would you advise the firm to do? What would you advise the firm to do if you knew average variable costs were $3.50?
If the average total cost of producing wheat is $8 and the price of wheat is $6, what would you advise the farmer to do?
Demonstrate the effect of the decline on equilibrium price for an individual cookie firm in the short run.
Would a society that emphasized a market mode of production benefit from having a moral framework that emphasized selflessness rather than selfishness?
Who would benefit and who would lose if an informational alternative to licensing doctors were introduced?
What is the effect of the moral hazard problem on insurance premiums? Explain your answer.
When Ben wears his red shirt, it bothers Sally, who hates the color red. Since Ben's wearing of a red shirt imposes a cost on Sally, it involves an externality
The book titles this chapter Market Failure versus Government Failure. If so, how would you characterize that bias? (Austrian)
If you accept this definition of economics, under what conditions is government intervention in the market acceptable? (Institutionalist)
How could a contractual agreement overcome the problems of asymmetric information in that market?
Which of your textbook's list of market failures apply to the privatization of water utilities in South Africa?
What are some arguments in favor of this proposal? What are some arguments against?
How might an economist suggest modifying this law to better achieve economic efficiency?
Economist Robert W. Turner suggested three market failures that could justify. What three failures did he likely discuss and what is the cause of the failure?