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What are the two problems that arise when the government regulates a natural monopoly by limiting price to be equal to marginal cost?
What is the difference between vertical and horizontal product differentiation? Provide an example of each.
At the symmetric equilibrium, what are the industry output and price levels? What are the equilibrium per firm output and profit levels?
Find a firm's best-response function, the Cournot equilibrium output, price, and profit. What type of equilibrium is this?
Find the Cournot equilibrium output and profit. How many firms (as a function of K) can survive at the equilibrium?
Find the Cournot equilibrium output and profit. Give a precise economic intuition explaining your answer relative to the usual (linear cost) case.
List all conditions on the primitives of the model such that each firm is better o¤ after these mergers. Explain your answer (no proof needed).
Discuss how brand promotion can increase ineciency. Is brand proliferation good or bad?
Demonstrate that monopoly is Pareto-inecient. Must it always lead to a lower level of social welfare than competition?
Consider a monopolist operating the underground in Europacity with total cost curve given by c(x) = 15 + 5x. How much economic profit does the monopolist take?
Assuming both parties are risk neutral, which compensation scheme should the government use?
What would happen to an insurance company that decided to sell insurance at the same price to all drivers with the same driving records no matter?
Discuss the argument that paying for human blood has the effect of lowering its average quality because people who are driven by the profit motive.
What are the risks for women and for men who were paying very different rates? Who gains and who loses?
In each case identify the principal (uninformed party) and the agent (informed party) and explain why there is asymmetric information.
Why should the government allow insurance companies to use genetic testing to better assess the health status of their applicants?
What is fair insurance? Why will a risk-averse consumer always buy full insurance when it is fair insurance?
She is the only person who can perform a Nora Jones concert. Does this fact imply that the government should regulate ticket prices for her concerts? Explain.
Will that price lead to the ancient number of crossings? Why or why not? What will be the company's profit or loss? Should it build the bridge?
What would be the effect on total consumption and, especially, for drug consumers in Uganda? What would be the effect on US drug consumers?
If you have a fixed income of $10, how much would you spend on public good? What level of expenditure on the public good maximizes the total level of utility?
What is a public good? How can one determine the ancient level of provision of a public good?
In the United Kingdom the lifeboat service is funded by charitable donations. How can this work? How are the rescue services funded in other countries?
What will be the ancient membership level of a club if there is no congestion? Is it still appropriate to call it a club good if there is no congestion?
How can this fact be used to place a lower bound on their valuation of the countryside?