Questions from Microeconomics


Q: Jeff and James have different opinions regarding the amount the U.

Jeff and James have different opinions regarding the amount the U.S. government should spend on national defense. Jeff believes that more should be spent in order to ensure that the country’s enemies...

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Q: How is the separation of ownership from control related to the principal

How is the separation of ownership from control related to the principal–agent problem?

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Q: Employees in most circumstances do not pay taxes on the value of

Employees in most circumstances do not pay taxes on the value of the health insurance provided by their employers. If employees were taxed on the value of the employer-provided health insurance, what...

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Q: According to an editorial in the Washington Post, “Sugar protectionism

According to an editorial in the Washington Post, “Sugar protectionism is a burden on consumers and a job-killer.” a. In what sense does the United States practice “sugar protectionism”? b. In what wa...

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Q: The following excerpt is from a letter sent to a financial advice

The following excerpt is from a letter sent to a financial advice columnist: “My wife and I are trying to decide how to invest a $250,000 windfall. She wants to pay off our $114,000 mortgage, but I’m...

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Q: Historically, the production of many perishable foods, such as dairy

Historically, the production of many perishable foods, such as dairy products, was highly seasonal. As the supply of those products fluctuated, prices tended to fluctuate tremendously—typically by 25...

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Q: William Easterly in The White Man’s Burden shares the following account by

William Easterly in The White Man’s Burden shares the following account by New York University Professor Leonard Wantchekon of how Professor Wantchekon’s village in Benin, Africa, managed the local fi...

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Q: Suppose consumers pay less than the true cost of medical services because

Suppose consumers pay less than the true cost of medical services because a third party, such as an insurance company or the government, pays most of the bill. In the following graph, D1 represents th...

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Q: Suppose that the United States currently both produces kumquats and imports them

Suppose that the United States currently both produces kumquats and imports them. The U.S. government then decides to restrict international trade in kumquats by imposing a quota that allows imports o...

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Q: What does it mean for a producer or consumer to internalize an

What does it mean for a producer or consumer to internalize an externality? What would cause a producer or consumer to internalize an externality?

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