.5 [Related to Solved problem 1.1] Suppose Dell Technologies is currently selling 250 000 Inspiron laptops per month. A manager at Dell argues: 'The last 10 000 laptops we produced increased our revenue by $8.5 million and our costs by $8.9 million. However, because we are making a substantial total profit of $25 million from producing 250 000 laptops, I think we are producing the optimal number of laptops.' Briefly explain whether you agree with the manager's reasoning. 1.6 [Related to Solved problem 1.1] From 2009 onwards movie studios began to release a number of films in 3D format. To show films in this format cinemas have to purchase 3D equipment that costs around $75 000 for each projector. Usually, cinema owners charge about $4 more for a ticket to a 3D movie than for a movie in the conventional 2D format. If you owned a cinema, discuss how you would go about deciding whether to invest in 3D equipment. 2.4 What is the difference between efficiency and equity? Why do government policy-makers often face a trade- off between efficiency and equity? 2.6 In a market economy, why does a firm have a strong incentive to be productively, allocatively and dynamically efficient? What does the firm earn if it is efficient, and what happens if it is not? 2.8 Centrally planned economies have been less efficient than market economies. a. Has this happened by chance or is there some underlying reason? b. If market economies are more economically efficient than centrally planned economies, would there ever be a reason to prefer having a centrally planned economy rather than a market economy? 2.10. Assume that the state and territory governments throughout Australia increase the price of water in an attempt to reduce consumption for domestic use. What are the equity considerations with this policy? 2.11. Suppose that your local police recover 100 tickets to a big football match in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 a.m. on Monday at the Town Hall. a. What groups of people will be most likely to try to get the tickets? Think of specific examples and then generalise. b. What is the opportunity cost of distributing the tickets this way? c. Productive efficiency occurs when a good or service (such as the distribution of tickets) is produced at the lowest possible cost. Is this an efficient way to distribute the tickets? If possible, think of a more efficient method of distributing the tickets. d. Is this an equitable way to distribute the tickets? Explain. Copyright 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) - 9781488612497/Hubbard/Microeconomics/4e 13.7. Explain which of the following statements represent positive analysis and which represent normative analysis. a. A $2 per-packet tax on cigarettes will reduce smoking by teenagers by 12 per cent. b. The federal government should spend more on cancer research. c. Rising paper prices will increase textbook prices. d. The price of coffee at a caf is too high. 4.2. Briefly explain whether each of the following is primarily a microeconomic issue or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold b. The effect of higher income taxes on the total amount of consumer spending c. The reasons for the economies of East Asian countries growing faster than the economies of Sub- Saharan African countries d. The reasons for low rates of profit in the airline industry