Principles of Economics- Mankiw (5th) 364

Principles of Economics- Mankiw (5th) 364 - 374 PA R T F I...

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374 PART FIVE FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY 6. Suppose that you and a classmate are assigned a project on which you will receive one combined grade. You each want to receive a good grade, but you also want to do as little work as possible. The decision box and payoffs are as follows: Assume that having fun is your normal state, but having no fun is as unpleasant as receiving a grade that is two letters lower. a. Write out the decision box that combines the letter grade and the amount of fun you have into a single payoff for each outcome. b. If neither you nor your classmate knows how much work the other person is doing, what is the likely outcome? Does it matter whether you are likely to work with this person again? Explain your answer. 7. The chapter states that the ban on cigarette advertising on television in 1971 increased the profits of cigarette companies. Could the ban still be good public policy? Explain your answer.
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