Microeconomics

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NAME:__________________________

1. It is reported that many banks today have a dangerously high number of high risk loans in their portfolios. As we enter a period of deregulation should we be concerned about this loan portfolio decision? Who is at risk when a manufacturing firm fails? When a bank fails?

2. What modes of transportation are currently subject to price regulation? Has deregulation of the airline industry been successful? Should we deregulate other transportation industries?

3. Is all regulation bad? Comment on both the 'old (economic)' and 'new (social and environmental)' style regulation.

4. Did concern for 'pay-as-you-go' enter into the breakup of AT&T? Is there increased competition in the terminal equipment market since the breakup? Is there increased competition in the provision of long distance services? Is there increased competition in the provision of local call service? Which phone rates have increased, which decreased?

5. Is nationalization of a firm an alternative to regulation?

6. Why have the agencies charged with protecting our health and welfare (OSHA,EPA etc.) not been particularly successful? Does the problem lie with problem definition, goal setting, rules for achieving the goal or in enforcement?

7. Distinguish between short run, long run and fully distributed costs in the railroad industry. Which should be used in the pricing of rail services?

8. Why has Conrail been so profitable recently? Should it be privatized? If privatized, should it be regulated? Would you make the same recommendations for the SEPTA high speed rail lines, bus lines or trolley lines?

9. Why might a regulated firm go bankrupt if forced to set price at short run marginal cost?