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Group projects are often assigned in classes, with everyone in the group receiving. Explain why a free-rider problem might arise in this situation.
Explain why producing either less or more than the level of output at which marginal revenue equals marginal cost will reduce profits.
What are the three basic functions of money? Describe how rapid inflation can undermine money's ability to perform each of the three functions.
Under what circumstances will price be equal to average costs, so that even though there is a single firm in the market, it earns no monopoly rents?
Describe market equilibrium under monopolistic competition. Why does the price charged by the typical firm exceed the minimum average cost?
What are the gains from collusion? Why is there an incentive for each member of a cartel to cheat by producing more than the agreed-on amount?
Explain the incentive problem involved if regulators ensure that a natural monopoly will be able to cover its average costs.
Explain why such competition will not be as good for consumers as an extremely sophisticated regulator, and why it may be better than many real-world regulators
Does it follow that each of these is a monopolist? In each case, explain what sources of competition the firm might face that would limit its market power.
What does that imply about cross subsidies in AT&T's pricing of local and long-distance service?
What are some of the problems in implementing antitrust policy and some of the current controversies surrounding it?
How might government ownership or regulation address this problem? What are the problems of each?
Explain why the marginal cost curve of a natural monopoly lies below its average cost curve. What are the consequences of this?
Explain why these practices might increase Nintendo's profits.
How does saving relate to investment and thus to economic growth?
What would you have assumed about the responses of other airlines? Would this have been important to your assessment?
Share the costs of cleaning up pollution, or address shortfalls of supplies-end up helping firms to collude in reducing quantity and raising price?
Draw the demand curve the gas station faces, and draw its marginal and average cost curves. Explain the rule for maximizing profit in this situation.
Assume there is a single firm producing cigarettes, and the marginal cost of producing cigarettes. Why will the price rise by more or by less than the tax?
In the United States of Albion, expected inflation is 5% and the real interest rate is 2%. (a) What is the nominal interest rate?
Question 1. A company dedicated to tabaco has a cost and revenue function of:
Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.
Calculate the sustainable primary surplus/deficit for each country and identify which countries (if any) have a potential debt crisis on their hands.
Compute compound annual percentage changes in real GDP (economic growth) and compute the shares in real GDP.
How does a change in monetary policy on the part of the Fed impact nominal interest rates, the consumer price index, and inflation rates?