1. Define what economists mean when by "efficiency" and discuss the conditions under which markets can be expected to deliver "efficiency." Give at least two examples of situations where the markets fail to lead to efficient outcomes.
2. Describe how price ceilings and floors operate, and the reasons that they are sometimes introduced, giving examples of each. Discuss at least types of unintended consequences that occur that occur as a result of the imposition of price controls.
3. Define what is meant by the "free-rider" problem in the context of a public good. Explain how the problem arises, and how it can be overcome.
4. Give an example how private bargaining can be used in place of government interventions to resolve problems associated with positive or negative externalities. Describe what, if any, role the government plays in the bargaining process. What problems might prevent bargaining from reaching an "efficient" solution?
5. "We cannot impose a tax on sweetened drinks because firms will simply pass along the cost to consumers." Critique the accuracy of this statement using supply, demand, and elasticity.
6. Suppose that news sources report political unrest in the Middle East that buyers and sellers of oil alike expect to disrupt future oil supplies. State how this event changes future expectations for the price of gasoline. Explain how the change in expectations impacts the supply and demand for gasoline today. Describe the effect of these expectations on the equilibrium price and quantity of gasoline today.