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Questions:
1. Suppose you can separate consumers into two groups: Group 1 has a price elasticity of demand = -4 and group 2 has a price elasticity of demand of -6. If you could conduct third degree price discrimination, which group would you charge a higher price to? Why? Suppose the the profit maximizing price for group 2 is $36. What price should I charge group 1? Show all your work.2. We have discussed how signals can be used to solve adverse selection problems. Provide a unique and personal example of adverse selection and discuss the possible signals that could be used to identify low and high quality types. Which signal would be most effective and why?3. This question requires some extra research on your part. In class we have discussed extensively the notion of moral hazard. You may have heard of the economic problem of "free riding." How can moral hazard be thought of as a type of free riding? Please explain fully and provide an example to illustrate your answer.
Review major news reports and discuss a current macroeconomic event. Explain the nature of the event, problem, or the current issue of choice and discuss its re
Imagine that it is the year 2199. Technology has progressed at an incredible pace. The latest discovery is the plutonium engine, which is capable of converting plutonium, a by-product of nuclear fission, into fuel to power the nuclear reactors in our..
Explain why the following statement is either true or false. An increase in the wage rate of labor (with no change in the rental rate of capital) shifts the long-run cost curve upward (at each level of output), no matter what the elasticity of substi..
Can we conclude that the slope of the regression line is less than zero?
Construct a 90% confidence interval for the proportion of customers that leave with a purchase.
Equilibrium discrimination and crowding. Suppose there are two occupations, economists and psychologists. Long-run competition. Most of the cost of a new airplane is in the research and development and in building production facilities. By contrast, ..
A firm starts production of a new product, and forecasts production and sales during the time periods (t1,t2,t3)=(1,2,3). The demand during time period t is estimated to be equal to t(4-t)/p^2 where p is a price of a product the firm will have to cho..
Explain how the following events affect output, capital and consumption per unit of labor in the long run and along the transition according to Solow's Model:
"If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry." Please explain.
Suppose the cross-price elasticity of demand between goods X and Y is 2. How much would the price of good Y have to change in order to change the consumption of good X by 50 percent?
In your opinion, does the Houston Medical Center, in which many hospitals gather, represent an example of perfect competition.
Ibrahim and his sons (Ibrahim & Sons) have been operating an excavation company in British Columbia for the last 15 years.
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