Define public goods and common resources, and give an example of each What is the free-rider problem?
Question:
Define public goods and common resources, and give an example of each
What is the free-rider problem?
Why does the free-rider problem induce the government to provide public goods?
How should the government decide whether to provide a public good?
Why do governments try to limit the use of common resources?
Give an example of a negative externality and a positive externality.
Explain why market outcomes are inefficient in the presence of externalities.
Give an example of a private solution to an externality.
What is the Coase theorem?
Why are private economic actors sometimes unable to solve the problems caused by an externality?
When a competitive firm doubles the amount it sells, what happens to the price of its output and its total revenue?
How does the price faced by a profit-maximizing competitive firm compare to its marginal cost? Explain.
When does a profit-maximizing competitive firm decide to shut down?
When does a profit-maximizing competitive firm decide to exit a market?
In the long run with free entry and exit, is the price in
a market equal to marginal cost, average total cost, both, or neither?
Explain with a diagram.
What are the three reasons why a market might have
a monopoly?
Give two examples of monopolies, and explain the reason for each.
Explain how a monopolist chooses the quantity of output to produce and the price to charge.
How does a monopolist's quantity of output compare with the quantity of output that maximizes total surplus?
Give two examples of price discrimination.
How does perfect price discrimination affect consumer surplus, producer surplus, and total surplus?
Describe the ways policymakers can respond to the inefficiencies caused by monopolies.
List a potential problem with each of these policy responses.
Define oligopoly and monopolistic competition and
give an example of each.
List the three key attributes of monopolistic competition.
Draw a diagram and explain the long-run equilibrium in a monopolistically competitive market.
How does this equilibrium differ from that in a perfectly competitive market?
How might advertising make markets less competitive?
How might it make markets more competitive?
Give the arguments for and against brand names.
If the members of an oligopoly could agree on a total quantity to produce, what quantity would they choose?
If the oligopolists do not act together but instead make production decisions individually, do they produce a total quantity more or less than in your answer to the previous question?
Why?
Tell the story of the prisoners' dilemma. Prepare
table showing the prisoners' choices and explain what outcome is likely.
What does the prisoners' dilemma teach us about oligopolies?
What kind of agreement is illegal for businesses to make?
Why are the competition laws controversial?
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