"Regulations do not always have the intended result." Do you agree or disagree? Why?
What will be an ideal response?
Agree. Firms often try to avoid the effects of regulation. Firms engage in creative response, which is a response to a regulation that conforms to the letter of the law but undermines its spirit. Further, individuals may alter their behavior in ways that run counter to the goals of the regulation. For example, people may drive less carefully in safer cars, causing as many injuries as when the cars were less safe.
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What are derivatives and derivative markets? Explain with an example
Why is the use of theory and observation more difficult in economics than in sciences such as physics?
a) It is difficult to evaluate an economic experiment. b) It is difficult to devise an economic experiment. c) It is difficult to actually perform an experiment in an economic system. d) It is difficult to collect sufficient data.
For a monopolist, if total revenue increases as output decreases, then marginal revenue is
A. equal to price. B. negative. C. positive. D. zero.
What is the government’s primary method for providing public goods and reducing free riders?
a. Requiring citizens to pay taxes b. Shifting R&D to private firms c. Investing in higher education d. Guaranteeing intellectual property rights