Understanding The Economics of Business

For the Unit 3 Complete assignment, write a narrative essay (minimum of 1200 words) which addresses the questions and statements below.  When finished, the essay should demonstrate a thorough understanding of the READ and ATTEND sections.  A minimum of three scholarly sources are required, and all sources should be cited and referenced in APA format. 

1. Give an example of each of the following:
   a. A good that is rivalrous in consumption and is excludable.
   b. A good that is nonrivalrous in consumption and is excludable.
   c. A good that is rivalrous in consumption and is nonexcludable.
   d. A good that is nonrivalrous in consumption and is nonexcludable.
    
2. Identify each of the following as an adverse selection or a moral hazard problem
   a. A person with car insurance fails to lock his car doors when he shops at a mall.
   b. A person with a family history of cancer purchases the most complete health coverage available.
   c. A person with health insurance takes more risks on the ski slopes of Aspen than he would without health insurance.
   d. A college professor receives tenure (assurance of permanent employment) from her employer and begins to work less hard.
   e. A bank gives out a loan to a person who does not have a stable job.                                                                                                                                                                                                                                                                                                                                                                 
3. Using the data in the accompanying table, answer the following questions:
   a. For which good does Canada have a comparative advantage?
   b. For which good does Italy have a comparative advantage? 
   c. What might be a set of favorable terms of trade for the two countries?
   d. Prove that both countries would be better off in the specialization-trade case than in the no-specialization-no-trade case.
    
4. In the accompanying figure, 
    

PW is the world price and PW + T is the world price plus a tariff. Identify the following:
a. The level of imports at PW
b. The level of imports at PW + T
c. The loss in consumers’ surplus as a result of a tariff 
d. The gain in producers’ surplus as a result of a tariff
e. The tariff revenue received by the government as a result of a tariff 
f.  The net loss to society as a result of a tariff
g. The net benefit to society of moving from a tariff to no tariff