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Show how the market demand curve is derived from individual demand curves (a) for a private good and (b) for a public good.
A firm is described as combining managerial coordination with market exchange. Analyze why does similar behavior occur in government bureaus? Explain.
Explain what is the underground economy? What is the impact on the underground economy of instituting a tax on a certain productive activity?
Explain how rent seeking can lead to a drop in production of goods. What role might underground economy play in lessening the drop in productive activities?
Which groups typically bear the costs and which groups enjoy the benefits of traditional public goods and special-interest legislation.
(Distribution of Costs and Benefits) Why are consumer interest groups usually less effective than producer lobbies in influencing legislation?
Why is this consistent with the concepts of the median voter and rational ignorance discussed in this chapter?
If the government sets the price of electricity at the socially optimal level, why is the net gain equal to triangle abc?
How does a lack of competition affect prices and output?
Why would the government be opposed to a merger of two firms? How does the Justice Department decide which mergers to challenge?
(Antitrust Law and Enforcement) Discuss the difference between per se illegality and the rule of reason.
Compare and contrast the public-interest and special interest theories of economic regulation. What is the capture theory of regulation?
(Business Behavior and Public Policy) Define market power, and then discuss the rationale for government regulation of firms with market power.
Why do some oil companies drill for their own crude oil and others buy crude oil in the market?
(Rationale for the Firm) Explain Ronald Coase's theory of why firms exist. Why isn't all production consolidated in one large firm?
Identify the rate of interest and quantity of funds lent for purchasing new cars.
Show how an increase in demand for loanable funds arising from newfound optimism in the business community about future economic growth could increase?
How have interest rates changed over the past year? Compare the graphs for several different securities. Have the rates on various securities moved identically?
If the marginal resource cost rose to $24,000 what would be the optimal investment at a market interest rate. What would be the optimal level of investment?
Describe the three ways in which corporations acquire funds for investment. What role do securities exchanges play in financing corporations?
Show how to compute the cost to the state of paying out such a prize. Assume payments are made at the end of each year.
(Consumption, Saving, and Time) Explain why the supply of loanable funds curve slopes upward to the right.
Illustrate the effect in the market for musicians when the musicians are successful in having their demands met.
New England shoe manufacturers hired workers in a competitive labor market. Show the effects of a union wage rate that is higher than the market wage rate.
However, for each additional dollar per hour, she would cut back on work by one hour per week. In the diagram, sketch both parts of Kelly's labor supply curve.