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Peacocks, with their fabulous tails, live wild in the jungle. There, a tail is a detriment – it slows the birds in flight, and presents an excellent handle for a predator to grab hold of. Nevertheless, males continue to grow

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Suppose that there are two types of workers in the world: Charlie Hustles, who are high-productivity workers, and Lazy Susans, who are low-productivity workers. The market would pay $70,000 (in present value terms) to hire a Charlie Hustle, but only

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Princess Buttercup has a multitude of potential suitors. She wishes to separate them into two groups – those who are truly interested in her hand in marriage, and those who are only interested because she’s convenient, pretty, and rich. Let’s

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The board of directors of a major is trying to determine how to structure the salary of the new CEO. One option is for the board to offer the new CEO a flat salary of $1 million per

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A woman plans to divorce her philandering husband. If she can prove he cheated on her, she will receive a $500,000 cash settlement. If she cannot, her settlement will be $250,000. Her lawyer offers to take the case and presents

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a. Determine the optimal amount of precaution the homeowner would take if theft insurance were unavailable.
b. Suppose that the homeowner can obtain an insurance policy that covers half of any losses he might suffer. Assuming that the marginal

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a. On the graph, determine the optimal amount of resources Harry should expend making himself more attractive to Sally.
b. Harry marries Sally. The marriage contract raises the cost of exiting a relationship, and thus, for any given level

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You are a USDA pork analyst, charged with keeping up-to-date on developments in the market for “the other white meat.” Recently, the demand for beef decreased.
a. Explain how pork and beef might be linked on the demand side

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Suppose that lettuce and tomatoes are goods that are related on the demand side of the market, and that both markets are in equilibrium. George and Janet are analyzing the effect of an increase in the demand for tomatoes. George

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Consider the wine and cheese problem you solved in Problem 3. Suppose the demand for wine changes so that at every price, 10 fewer bottles are demanded.
a. Hold the price of cheese constant, and calculate the partial equilibrium