Changes

3.  Suppose your annual income increases from $20,000 to $25,000.  Suppose your demand for steak increases by 10% and your demand for fast food hamburgers decreases by 5%.  Which type of goods are steak, and which type are hamburgers?

3.  Suppose your annual income increases from $20,000 to $25,000.  Suppose your demand for steak increases by 10% and your demand for fast food hamburgers decreases by 5%.  Which type of goods are steak, and which type are hamburgers?

4.  What does an owner do when his marginal revenue exceeds his marginal cost?  Explain, including what will eventually happen to the marginal revenue compared with marginal cost for the owner.

4.  What does an owner do when his marginal revenue exceeds his marginal cost?  Explain, including what will eventually happen to the marginal revenue compared with the marginal cost for the owner.

5.  What does the Coase theorem say about the desirability, and the effect, of government regulations that increase transaction costs?

5.  What does the Coase theorem say about the desirability, and the effect, of government regulations that increase transaction costs?