Microeconomics 2nd Global Edition Daron Acemoglu, David Laibson, John List - Solutions

Unlock your understanding of "Microeconomics 2nd Global Edition" by Daron Acemoglu, David Laibson, and John List with our comprehensive solutions. Access the complete answers key, solution manual, and chapter solutions in easy-to-download PDFs. Our expertly crafted solutions pdf offers step-by-step answers and solved problems to enhance your learning experience. Dive into the instructor manual and test bank for an in-depth exploration of textbook questions and answers. Enjoy the convenience of free download options to master the course content with ease.

1. 14. What is cost-benefit analysis?
1. 12. What are replacement cost methods?
1. 9. What are nonuse benefits? What is total economic value?
1. 8. What are ecosystem services?
1. 7. What is intrinsic value?
1. 6. What is the willingness-to-pay principle?
1. 5. What is an upstream tax? What is a revenue-neutral tax?
1. 7. Mat ea concept in Column A with an example in Column B.Column A Column B Column Aa. An example of a progressive taxb. An example of a regressive taxc. A proportional taxd. An excise taxe. Inelastic demandf. Elastic demand g. Effective tax rate h. Supply-side economics i. Tax incidence
1. 4. Consider the following table, whi shows the total amount of taxes paid at different total income levels in a society. For ea income level, calculate the effective tax rate. Is this tax system progressive or regressive? Explain.Total income Total taxes
1.1. Suppose that your town decides to impose a tax on 2-liter boles of soda to encourage healthier dietary habits. Before the tax, the supply and demand sedules for boles of soda are given in the table below.Price per bottleantity supplied per monthantity demanded per month$1.00
1. 17. What is supply-side economics?
1. 14. What are federal social insurance taxes?
1. 13. How is an effective tax rate calculated?
1. 8. What are the four justifications for taxation?
1. 7. How does an excise tax affect overall social welfare?
1. 3. What are the two motivations for taxing a product?
1. 3. Mat ea concept in Column A with a definition or example in Column B.Column A Column Ba. Economic mobility 1. A very unequal income distributionb. Kuznets curve hypothesis 2. Wages, salaries, and fringe benefitsc. Capital gain 3. Income not adjusted for taxes and transfersd. intile 4.
1.. Statistics from the World Bank indicate the household income distribution in Vietnam, for 2014, as follows:Group of Households Share of Aggregate Income Poorest quintile 7.1%Second quintile 12.0%ird quintile 16.4%Fourth quintile 22.4%Riest quintile 42.2%a. Create a carefully labeled
1. 16. What are some of the consequences of inequality?
1. 9. How does economic mobility in the United States compare to that in other industrialized countries?
1. 8. What is economic mobility?
1.7. How does income and wealth vary by race?
1.2. How is a Lorenz curve constructed? What does it measure?
12. You must decide whether to eat at Burger Hut or Pizza King, two local restaurants that are right next to each other. You have heard a few good things about Burger Hut, so your prior is that there is a 60% chance it is better; thus there is a 40% chance Pizza King is better. However, when you
11. There was a sharp increase in the number of the longterm unemployed following the recession that began in December 2007. Rand Ghayad did the following study to better understand long-term unemployment. He sent out 3,600 fake resumes in response to 600 job openings. He varied the length of time
10. A field experiment was conducted to see how others’ opinions affect a user’s ratings online. Whenever a comment was added on a certain social news site, researchers randomly assigned an up vote, a down vote, or no vote. The researchers conducting the experiment noted that comments that
9. There are two new restaurants in your neighborhood: a Thai restaurant, and a Chinese restaurant. You want to have Thai food but your close friend wants to try the Chinese one.a. Based on the optimization behavior of people, what would be the result?b. What could change your answer to part a? If
8. What if the Trust Game were played in reverse? Gary first decides whether to cooperate (Gary gets $15, Jen gets $15) or defect (Gary gets $30, Jen gets $0). Jen then decides whether to accept this outcome or give $10 to both players. What is the equilibrium? How does this compare to the outcome
7. Consider the Ultimatum Game played in reverse: The Responder moves first and decides preemptively whether to accept or reject whatever split the Proposer eventually determines. If the Responder chooses to reject, both players get nothing; but if the Responder accepts, then the Proposer decides
6. In Mario Puzo’s The Godfather, Michael Corleone (played by Al Pacino in the movie version of the book) would like to meet with Virgil “The Turk” Sollozzo. Michael is concerned that if he meets with Sollozzo, Sollozzo will kill him. We can think of their problem as a game. First, Michael
5. Assume that a charity hired you to improve its results on donations. You decide to mail letters asking for donations. You use three different types of letters: Letter A: Control—standard letter asking for money. Letter B: “Once and Done”—standard letter but with a statement at the front
4. Let’s add a twist to the Ultimatum Game: there is $10.00 to be split, but if the Responder rejects the offer, then he gets $2.00 and the Proposer gets $4.00. Use backward induction to determine the equilibrium. Assume that $0.01 is the smallest increment of money possible.
3. In a dorm room, four of you are discussing about buying a new clock. Each of you has $20 in pocket. Suppose that a clock costs $40, but the benefit of having a clock in the room is $6 for each of you. You come up with the idea that the cost of the clock should be distributed equally ($10 per
2. Consider a three-person version of the Ultimatum Game: The Responder does not receive any money but instead decides whether to accept on behalf of a third-party bystander. Otherwise the structure is like that of the Ultimatum game in which the Proposer first decides how to split $10.00. Suppose
1. Under the tax law in 2012, you could claim all of your charitable contributions as a deduction on your federal income tax (if you decided to itemize your deductions), and the top marginal tax rate was 35 percent.a. What is the cost of a $100 charitable contribution under 2012 tax law for
12. Only few tourist destinations are well-known in each country despite the fact that many other (possibly better) destinations are available but they are not often visited. What could be the explanation? 13. What is an information cascade? Explain with examples.
11. What does it mean to say that a good exhibits network externalities? Can you think of a good that you use because it has network externalities?
10. In Thailand, many undergraduate students spend their summer time in the rural area where they build libraries or classrooms for the locals without getting compensated. Do you think their behaviors are rational? What could be the reason?
9. Consider a trust game between two players. Suppose the players care only about their own payoffs. The payoffs are such that, in equilibrium, the players do not trust each other, leading to a socially inefficient equilibrium. How could the game be changed so that in equilibrium, the players do
8. In the Dictator Game, the Allocator decides how a certain sum of money is to be divided, and the Recipient must accept whatever choice the Allocator makes. How does the outcome of the game differ when the Allocator remains anonymous to the Recipient versus when the Allocator faces the Recipient?
7. Why do lab experiments show a different outcome for the Ultimatum Game compared to the outcome predicted by game theory?
6. In the Friend or Foe? game, Foe is a (weakly) dominant strategy for both players. What can explain why, in roughly 50 percent of decisions, players chose Friend and split the sum of money with the other player?
5. In the context of this chapter, what is meant by having a preference for fairness?
4. Refer to the experiment in the chapter on soliciting donations for a children’s hospital. Experimenters put flyers on doors saying that solicitors would be stopping by at a particular time. Fewer people opened the door when they knew that a solicitor would be coming, but those who did gave
3. What is the difference between pure and impure altruism? Can you give examples from your experiences?
2. Suppose the act of giving is viewed as an economic good. How can the price of charitable donations be measured? Does the quantity demanded decrease as the price of giving increases?
1. How does the standard model of Homo economicus differ from the Homo economicus that is studied in behavioral and social economics?
12. This chapter illustrates how the Coase Theorem can be applied to explain the outcome of a divorce in two different systems. In both cases, where the unhappy partner values the divorce at $5,000 and the happy partner values the marriage at $10,000, the equilibrium is “no divorce.” Now
11. Space heaters are dangerous. The U.S. Consumer Product Safety Commission estimates that more than 25,000 residential fires every year are associated with the use of space heaters, resulting in more than 300 deaths. This question asks you to think about the Coase Theorem and the assignment of
10. Ronald Coase used the example of a farmer and railroad tracks to explain bargaining. Sparks from trains running on tracks near farmland would set off fires in the fields. To avoid this, railroad companies would either have to stop running trains on tracks along fields or incur a cost in fixing
9. The Johnson Steel Company generates water pollution when it makes steel. It could eliminate this pollution at a cost of $700. The Smith family lives downstream. It suffers $1,000 of damages from the water pollution Johnson creates. Assume that transaction costs are zero.a. Suppose first that
8. Consider what would happen in the ultimatum game (with offers between $0 and $10) if the Responder were able to fully commit in advance. It would be as if the Responder had moved first; he would declare which offers he plans to accept, and which he plans to reject. This means that the so-called
7. The owners and the players’ union are negotiating over a contract for the upcoming hockey season. In October, the owners will make an offer to the union. If they reach an agreement, they will share $50 of revenues. So, for example, if the owners offer the players $10 in October and the
6. You have learned that in a second-price auction you should always bid your actual willingness to pay; not a penny more and not a penny less. Proving why this is always best, no matter what others bid, is somewhat subtle. However, it is relatively easy to argue that at least some of the time,
5. U.S. Treasury notes are sold at a discount. For example, a buyer might offer $950 for a $1,000 note that will become due in 2 years because (as Chapter 15 explains) money received in the future is not as valuable as money received now. In September 1992, the U.S. Treasury began selling 2-year
4. A town wants to build a new bridge. Construction firms are asked to submit sealed bids. The town will award the contract to the firm that submits the lowest bid and will pay the firm the amount of the second-lowest bid, that is, the town will conduct a second-price procurement auction. So, for
3. The original Filene’s Basement in Boston had a unique pricing system. Every article in the store was marked with a tag showing the price and the date the article was first put on sale. Twelve days later, if it had not been sold, the price was reduced by 25 percent. Six selling days later, it
2. According to this chapter, in a first-price sealed bid auction (or a Dutch auction), a bidder should multiply her willingness to pay by the number of other bidders, then divide by the total number of bidders. Suppose you are willing to pay $60 for a pair of shoes that are being auctioned on
1. An escalation clause in a real estate contract specifies what a prospective buyer will offer for a home if the seller receives multiple offers. An escalation clause typically includes three elements: • The buyer’s initial offer • How much that offer will rise above any other competitive
13. Explain the predictions of the Coase Theorem in the case of divorce law, depending on whether “need one to divorce” or “need two to divorce” applie
12. Why does experimental evidence differ from game theory predictions about the outcome of the Ultimatum Game?
11. In a bargaining situation, if the cost of not reaching an agreement increases for one of the parties, what happens to its bargaining power? Why?
10. Why is the expected revenue from an English auction and a second-price sealed-bid auction equivalent?
9. What is the main difference between an English auction and a Dutch auction?
8. Suppose a bet is placed on the outcome of the flip of a coin—if the coin comes up heads, you get $25 and if it comes up tails, you lose $25. If you accepted this bet, does it imply that you are risk averse, risk neutral, or risk loving?
7. What is meant by risk neutrality?
6. What is a Dutch auction?
5. What is meant by sniping in an auction? Does it make sense to snipe to win an auction?
4. What is the dominant strategy for a bidder in a sealed-bid second-price auction?
3. What is an English auction?
2. What is the difference between an open-outcry auction and a sealed bid auction?
1. How does an auction encourage bidders to reveal their private valuations?
11. Suppose there are 1,001 sellers with used cars that they value at (i.e., their willingness to accept is) $0, $100, $200, $300, . . . , $9,900, $10,000. There are many buyers who place a higher value on each car than the current owners: $1,000 higher, to be exact. For example, a car worth
10. The government wants to reduce white-collar crime.a. Suppose for the moment that innocent people are never wrongly convicted of a crime. Explain why the Becker model of crime and punishment suggests that we increase the fines people pay if they are convicted instead of hiring more people to
9. Janet Yellen, the Chair of the Federal Reserve, is married to the Nobel Prize-winning economist George A. Akerlof. When they hired babysitters in the 1980s, they decided to pay wages that were higher than the going wage for babysitters. If they could get a babysitter at a lower wage, what could
8. The U.S. government, like many governments throughout the world, bailed out large financial institutions that were thought to be “too big to fail” during the 2008 financial crisis. Some critics of the bailouts argued that these policies created a moral hazard problem; banks would undertake
7. Steven Levitt and Chad Syverson compared instances of home sales in which real estate agents were hired by others to sell a home to instances in which an agent sold his or her own home. They found that homes owned by real estate agents sold for 3.7 percent more than other houses and stayed on
6. The U.S. government, like many governments throughout the world, bailed out large financial institutions that were thought to be “too big to fail” during the 2008 financial crisis. Some critics of the bailouts argued that these policies created a moral hazard problem: banks would undertake
5. Suppose some workers are capable and others are extraordinary. Firms are willing to pay capable workers a salary of $14,000 and extraordinary workers a salary of $20,000. Workers know if they are capable or extraordinary but firms do not (that is, ability is private information). It would
4. All used cars are lemons or peaches. Owners know whether or not their car is a lemon, but buyers do not; that is, the quality of a car is private information. There are many more buyers than sellers. Buyers value a peach at $2,000 and a lemon at $100; owners value a peach at $1,500 and a lemon
2. There are fifty low-risk people in a town and fifty highrisk people. A low-risk person has an average of $500 in medical expenses each year and is willing to pay $800 for medical insurance (this person is risk averse). A high-risk person has an average of $1,200 in medical expenses each year
1. Your new car is stolen just days after you buy it. You purchased it for $20,000 but the insurance company believes it is worth only $16,000.a. Why would the insurance company believe it is only worth $16,000?b. Is it worth more than $16,000 to you given your private information on the car?
10. How can jumping a red light while driving be modeled as a principal–agent problem? How would you encourage drivers to obey the law?
9. Explain the potential costs of high-powered incentives by considering the case of providing incentives to police officers. Would it be a good idea to pay higher wages to police officers if they make more arrests?
8. How might unemployment benefits create a moral hazard problem?
7. Does the presence of asymmetric information necessarily imply that governments should intervene in a market?
6. Suppose a worker is offered a wage higher than the efficiency wage. Why would such a worker work harder?
5. What is the role of incentives in a principal-agent relationship?
4. How do third-party certifications and warranties solve the adverse selection problem in the used car market? Explain your answer.
3. Why does adverse selection occur in the health insurance market?
2. Explain how the second-hand market for heavy equipment in the construction sector could be an example of hidden characteristics.
1. Give an example of hidden actions. Who is the principal and who is the agent in this case?
12. Assume the interest rate is 50 percent. What is the present value of a payment of $60 paid 1 year from now? How about the present value of $60 paid today and $60 paid a year from now? Challenge question: What about $60 paid today, plus $60 paid a year from now, plus $60 paid the year after
11. You are a venture capitalist who has just purchased a stake in a small company. You believe that a year from now this company may no longer exist, in which case your stake is worthless; there is an 80 percent chance of this happening. However, there is a 10 percent chance your stake will be
10. Your house is worth $100,000 and you have $50,000 in a savings account. There is a 2 percent chance of a fire in your house. If the fire occurs, there will be $50,000 in damages to your house.a. Suppose you do not have fire insurance. If the fire occurs, you will have to pay $50,000 to repair
9. You are considering playing a card game. The rules of the game are such that you pick a card from a standard deck of 52 cards and if the card is a face card (jack, queen, or king), you win $50. The catch is you have to pay the dealer a fee of $10 to play the game. What is the expected value of
8. Say whether or not each of the following statements assumes independence between events:a. “There is no such thing as a ‘hot hand’: A basketball player is just as likely to make her next shot regardless of whether she made her last shot.”b. “I notice that when one student scores above
7. This chapter talked about the idea of independent events.a. Suppose you draw a card from a standard deck of cards, you put that card back in the deck, and draw a second card. Are the events “Draw a diamond the first time” and “Draw a diamond the second time” independent events?b.
6. You observe a banker give $75 for a bond that pays out $100 in one year. Based on this observation, what do you conclude about the interest rate? Suppose that the price of this bond today suddenly increases to $80. Now what do you conclude about the interest rate? (Remember even though the price

Showing 1600 - 1700 of 6280

First
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Last

Microeconomics 2nd Global Edition Daron Acemoglu, David Laibson, John List - Solutions

Step by Step Answers