Problem Set 1 Due 12:20PM, Monday Sept. 10th True, False or Uncertain. Explain the justification for your answer . No credit given without explanation. Use graphs or algebra to help explain your answer. 1) It is possible for the short-run average cost curve to cross over the long-run average cost curve (use a graph to help illustrate your answer). 2) National regulations are always better than state regulations because they are more efficient and avoid legal battles among the states over jurisdiction. 3) The industries that the NPT (define) predicts will be regulated are highly correlated with those industries that actually are regulated. 4) A negative externality (define) will result in too little of the good in question being produced (use a graph to help illustrate your answer). 5) One main assumption of the Stigler/Peltzman model is that legislators try to maximize their political support, and therefore they will choose a policy that benefits interest groups that are better organized, even if these groups are small.
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