Knapp6 - WEEK 6 CH12 Q1 Cell phones have become very...

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WEEK 6 CH12, Q1 – Cell phones have become very popular. At the same time, new technology has made them less expensive to produce. Assuming that the technological advance caused cost curves to shift downward at the same time that demand was shifting to the right, draw a graph or graphs to show what will happen the short run and in the long run. CH12, Q9 – Which of the following are examples of Pareto-efficient changes? Explain your answer. a. Cindy trades her laptop computer to Bob for his old car. This exchange is Pareto-efficient because Cindy and Bob agrees to the exchange voluntarily. b. Competition is introduced into the electric industry, and electricity rates drop. A study shows that benefits to consumers are larger than the lost monopoly profits. The change is not Pareto-efficient because the monopoly is worse off. c. A high tax on wool sweaters deters buyers. The tax is repealed. Repealing the tax is not Pareto-efficient because the government loses revenue . d.
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Knapp6 - WEEK 6 CH12 Q1 Cell phones have become very...

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