1. A publisher of financial management software offers full refunds to any dissatisfied purchaser. Is the refund policy a signal of product quality? Explain why, and how signaling works.
2. Some companies continue in business even though they are losing money. Are they making a mistake? Explain why.
3. Consider the effect of changes in fares on the quantity demanded of taxi services. Do you expect demand to be more elastic with respect to fare changes in the short run or in the long run? Explain why.