The copycat game does not have a pure strategy Nash Equilibrium.
Mike’s Mealbarn is a competitive firm in the hot dog stand business. How will each of
the following affect the short-run demand for labor at Mike’s?
What is resale price maintenance and why would a manufacturer want to use it? Under
what circumstances would resale price maintenance increase social gain?
Higher insurance costs would cause a delivery firm to raise the price it charges.
Discuss whether or not a competitive, profit-maximizing firm would ever cease hiring
workers if the marginal product of the next worker is higher than that of the last worker
hired (that is, the firm is on the increasing portion of its marginal product curve).
In a competitive equilibrium, the industry’s output is produced at the lowest possible
cost because each firm has the goal of minimizing its cost.
It is guaranteed that a homeowner selling his house for $350,000 will secure positive
economic rents.
Suppliers of a commodity are better off whenever the legal incidence of a tax is shifted
away from the suppliers to the demanders.
If the consumer has the same tax bill under a head tax as under an income tax, then less
leisure will be consumed under the head tax than under the income tax.
Discuss the similarities and differences between “Cap and Trade” and a “Pigou Tax” as
they apply to correcting for externalities. Focus on how each affects the price paid by
consumers, the price received by producers, and the amount of revenue received by the
government. Also discuss the potential problems with achieving the efficient outcome
under each system.
Cap and Trade is so named because the government puts a “cap” on the amount of
exports that domestic firms are allowed to “trade” with foreign nations.
Suppose that a city law requires taxi drivers to wear tuxedos. The drivers must pay $10
per week for the tuxedos. Taxicab companies pay their drivers $210 per week. After
paying for the tuxedos, taxi drivers earn $200 per week.
(i) If the law were revised so that taxicab companies, not the drivers, must pay for the
tuxedos, what would happen to the taxi drivers’ earnings?
(ii) If the law were repealed, what would happen to the taxi drivers’ earnings? Be as
specific as possible.
Suppose there are two goods: guns and roses. Also suppose Australia is initially closed
to trade. When international trade is opened, Australia chooses to sell guns and buy
roses in the world markets.
If marginal cost rises when output is increased, then the average cost of production is
also rising.
Fixed costs have no effect on a firm’s profit.
Consider the following:
Consider a game in which all outcomes give the players the same total payoff. Explain
why every outcome in such a game will be Pareto optimal.
The present value of a perpetuity falls when the interest rate rises.