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Ronald Coase points out that a market failure does not arise simply because people ignore the external cost of their actions. What other condition is necessary?
(Optimal Level of Pollution) Explain the difference between fixed-production technology and variable technology.
Why does a solution to the overharvesting of timber in the tropical rainforests require some form of international cooperation?
What is the optimal output rule? What is a price-taker?
With your selected business in mind, determine if it is competitive, monopolistic competitive, an oligopoly, or pure monopoly.
Illustrate how economies of scale would enable Charles Cobbler to purchase the leather at a lower cost, C', than if it produces its own at cost C.
Many firms utilize both the concepts of outsourcing and economies of scope. Analyze the firm's decision in context of the theories developed in this chapter.
Look on the Economy page in the First Section or in Marketplace section. When you've found an article, try to analyze it using ideas developed in this chapter.
Discuss why would existing franchise owners have an interest in the maintenance of high application standards for new franchise owners?
Describe problems faced by health insurance companies as result of adverse selection and moral hazard. How do insurance companies try to reduce these problems?
Distinguish between hidden characteristics and hidden actions. Analyze which type of asymmetric information contributes to the principal-agent problem?
Online shopping is also growing. What reasons can you suggest for the growth in these forms of shopping?
Distinguish between economies of scale and economies of scope. Why do some firms produce multiple product lines, while others produce only one?
Read several position descriptions for jobs that are of interest to you. Identify the education and skill requirements of the positions.
Do you think the unions would have been more successful in organizing this group than IT workers? Why or why not?
Why might firms in industries with high fixed costs be inclined to prevent strikes or end strikes quickly?
Distinguish between mediation and binding arbitration. Under what circumstances do firms use these tools? What is the role of a strike in bargaining process?
Why do the firms in an oligopoly act independently or interdependently? Explain your answer.
What benefits might cause us to prefer the monopolistically competitive result to the perfectly competitive result?
Analyze what role can advertising play in product differentiation? How can advertising become a barrier to entry?
However, the industry is soon to be opened to competition. Identify the price and quantity that would be expected in a competitive market for electric power.
Identify the price Sal would charge. Add an average total cost curve so that the average cost per unit is $30. Create a shaded box illustrating profits.
Using demand and cost curves, draw a diagram depicting the firm's profit-maximizing price and output level.
Which economic decision makers determine the supply of labor? What is their goal and what decision criteria do they use in trying to reach that goal?
Draw a world demand curve for bananas. A cartel, OBEC, Organization of Banana Exporting Countries, is founded in attempt to drive up the world price of bananas.