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The Federal Trade Commission objected to the California Dental Association's prohibitions. What effect should such restraints have on equilibrium prices?
The "Twin Brands" application notes that an auto manufacturer may sell a luxury model for much more than another model. Is the firm a noisy monopoly?
Explain how a monopoly firm can price discriminate by advertising sales in newspapers or magazines that only some of its customers see. Is it a noisy monopoly?
Why do advertising and free meals taint the credibility of Gault Milleau? Discuss the moral hazard problem of Gault Milleau's ratings.
Why do insurance companies use home addresses? What are the efficiency and equity implications of forbidding such practices?
It finds that some people buy only milk there and do their other grocery shopping elsewhere. Is that an example of adverse selection or moral hazard?
According to a 2007 study by the Federal Trade Commission 4.8 million U.S. consumers were victims. Do these frauds illustrate adverse selection or moral hazard?
The state of California set up its own earthquake insurance program for homeowners. What are the implications of such rate setting?
Should consumers conclude that its mushrooms are likely to be of higher quality than unbranded mushrooms? Why or why not?
Use Akerlof's lemons model to explain why restaurants that cater to tourists. Determine the relative price by looking at menus posted outside each restaurant.
You plan to buy a used refrigerator this year for $200 and to sell it when you graduate in two years. What is the true cost of the refrigerator to you?
The price of the other air conditioner is $300, but it costs only $10 a year to operate. Assuming that both machines last 10 years, which is a better deal?
You expect your current washer to die in five years. If the cost of a new tumble-action washer is $800, should you replace your washer now or in five years?
Which contract has the highest present value, and that his personal discount rate (interest rate) is 5%, which contract does he accept?
You rent an apartment for two years. You owe a payment of today and another equal nominal payment next year. What is the present value of these rental payments?
What is the break-even personal discount rate at which someone would be indifferent between the two options?
Why should you buy a new car now rather than wait until your current car dies? Would you make the same decision if you faced a 10% interest rate?
The rate of interest on your savings account is 4% and will remain so for the next three years. Which payment method should you choose?
What is the smallest number of years that you must own the car so that the discounted cost of owning the car is less than the discounted cost of alternative?
Why should an employer discount the future health care costs in its decision whether to create a new position?
If the Nationals are expected to earn $20 million each year in the future, what is the internal rate of return on a $400 million investment for this club?
Assuming no inflation and no storage cost, how high would the price have to be next year for you to sell the oil next year rather than now?
Show in what year the owner should harvest such a good assuming that there is no cost to harvesting.
When you graduate from high school, should you go to college for four years at a cost of $12,000 per year or go directly into the fire department?
How do these subsidies affect the probability that these people will buy insurance and the amount they buy?