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If competitive firms have no signals available, what is equilibrium wage they would pay? Outline a pooling equilibrium in which neither type gets an education.
Compute a buyer's maximum willingness to pay for a car if he or she cannot observe the car's type.
Suppose they compete in a sealed-bid, secondprice auction. What are the equilibrium bidding strategies? Compute the seller's expected revenue.
What is the forward price of your contract? What is the price of a forward price contractr otherwise identical to yours?
Under what condition on s and b would Will plan to study for the test? What condition is required for him to carry through on his plan?
In the first scenario, you are given a choice between gambles A and B. Which would you choose given your utility function?
Suppose both the 1-year and 11-year spot rates unexpectedly shift downward by 2 percent. What is the price of a forward contract otherwise identical to yours?
Provide the formula for the amount of money after d days provided by each prize. Graph your results for values of d ranging from 0 to 31 days.
Explain the pros and cons of this view. What other market failures were identified in the book where government intervention might have been called for?
Which motives seem to best fit some of your favorite Web sites that give away free information?
Distinguish between altruism, fairness, and reciprocity. Suggest experiments related to the Ultimatum Game that could sort out.
What did Odysseus's having himself tied to the mast indicate about the level of his rationality? Provide three other examples of commitment devices used.
What difference does it make for policy which theory is right? How could the theories be tested apart using experiments?
What sort of cognitive limitation might this be? Would you expect market forces to prevent firms from exploiting consumers in this or other ways?
What are the relative merits of each approach? Would you expect the relative merits to change as knowledge advances?
What is the welfare cost of this rent-seeking activity? Do the bribes represent a welfare cost from rent seeking?
Which property of public goods does this pool have? Which does it not have? Would building the pool be an efficient use of resources?
She decides to sell the option at that time for $1.25 per share. How much has she made (or lost) on the hedging decision?
Why would a majority vote to undertake the project? What would be the net benefits to each person under such a scheme? Would total net benefits be positive?
Show graphically why someone paid an annual salary might be likely to shirk if monitoring is incomplete at the firm.
Show how the Coase theorem would apply to transactions between predators and companies manufacturing roadrunner-catching equipment.
Define Fiscal policy. What are the two components of fiscal policy?
What would happen to the equilibrium if the desk workers' valuation for shoes was less than the market price in part a?
Fully describe the method by which the Federal Reserve uses the banking system to create new money.
What are the effects of an appreciating/depreciating exchange rate on the balance of payments?