Economics Homework Ten - Model

1. In your own words, try to give a better definition of "externalities" than provided by this Lecture.

2. Explain why marginal revenue must be zero when total revenue is maximized.

3. What is your favorite question on the midterm exam that you answered incorrectly, and why is it your favorite?

4. Give an example of a positive externality, and an example of a negative externality. The example does not have to be limited to a business.

5. Explain why private firms in the free market are unlikely to try to provide public goods.

6. Review question: the cross-elasticity of A with respect to B is positive, and C with respect to D is negative. What is the relationship (complement or substitute?) of goods A and B with each other, and C and D with each other? Explain.

7. List the four factors of production and give a very brief explanation of each.

8. Mathematically prove (or disprove!) the answer to the question on the midterm exam about P=30/Q.

9. Provide, in your own words, the best definition of "public good" that you can.

10. Find a question on the midterm that describes a situation that would be unusual in the real world, and explain why the scenario of the question is unrealistic.

11. Revisit the problem on the midterm about the price ceiling (with the graph), which asked how much the shortage would be. Provide the correct answer and explain why. (If you answered it correctly, then provide a similarly difficult substitute question for this.)