1. Can you think of any reasons why the Law of Demand might not hold?
2. Would you expect most supply curves to have an upward slope? Why or why not?
3. Can you think of situations where the government would want to take actions that cause shortages?
4. In what markets and situations would you expect that the quantity demanded would not equal the quantity supplied?
5. Can you think of an example where a good is sold below equilibrium price without government intervention causing excess demand? Which property of perfect competition is violated?
6. Give an example of a product where the long-run elasticity of demand is less than the short-run elasticity.
7. Why might a government prefer one type of sales tax (ad valorem or specific) to the other?
8. How can we analyze commodities that are "bads" (garbage, water pollution)?
9. Name pairs of goods that you consume that are perfect substitutes.
10. Name pairs of goods that you consume that are perfect complements.
11. What kind of experiment could a firm conduct to determine the demand curve it faces?
12. How can the firm use the information contained in an Engel Curve and government forecasts of income to predict future demand?
13. Create a Prisoner's Dilemma game in normal form.
14. Write out your Prisoner's Delimma game in extensive form.
15. How can you determine how risk averse someone is?
16. Define
a. Expected Value
b. Expected Utility
c. Variance.
d. Standard Deviation
17. Are both the standard deviation and beta measures of risk?
18. Why would a company offer a "money-back guarantee if not completely satisfied" if the firm knows that it is impossible to satisfy all consumers completely?