Practice Midterm Examination
(Note: Unless otherwise specified, all supply and demand curves have the conventionally assumed slopes.)
1. If a rise in the price of oregano today causes a rise in
the price of basil tomorrow then basil is
a. a norma
NCC 5020 Lecture 19
Wage and Salary Determination
When the law prevents employers from paying a wage less than W min, the result is for employers to demand fewer workers.
Unemployment results. The workers who keep their jobs earn more than b
NCC 502 Lecture 18
Information and Search
Example 18.1. Suppose you want a new tennis racquet, but aren't sure which brand & model to buy.
Klein's has a large selection, so you go there and ask a salesperson for advice.
After some discussion about your ex
NCC 5020 Lecture 17
The Tragedy of the Commons
Example 17.1. A village has five residents, each of whom has accumulated savings of $100.
Each villager has two investment opportunities:
1. Buy government bond for $100 that pays 12% interest per year.
NCC 5020 Lecture 16
Sometimes costs or benefits that result from an activity accrue to people not directly involved in the activity. These are called
external costs or external benefits- externalities for short.
Example 16.1. Sara is an acco
5020 Lecture 21
Public goods are those goods or services that possess, in varying degrees, the properties of nondiminishability and
Nondiminishability: any one person's consumption of a public good has no effect on the amount