1. Price ceilings, in the form of rent ceiling, or price floor, in the form of minimum wage, appear to be good initiatives from the

government to promote the welfare of all.  Explain how these work and what they are intended to accomplish.  Discuss the possible benefits

or drawbacks of these policies in a small essay (10 to 15 sentences), and include a list of your sources (references).

2. Economists agree that education generates substantial positive externality, in most cases, if it is left to private colleges and/or

universities, too little will be provided, if that is the case, discuss ways society should encourage the efficient production or the

consumption of education.  More importantly, decide which one of the policy prescriptions you would recommend and why.   Explain in

6sentences.

3. Economists agree that it is beneficial for countries to trade with one another.  First, explain the fundamental force that drives

international trade among nations; second, explain why countries use different kinds of trade barriers (give two or three examples of

these). Third, which kinds arguments are often used for protection from foreign competition (limit to 2 traditional and one new)?  Of

those arguments, which one could you justify (could make sense) for the case of the USA?  Explain (6 sentences).

4. In 2013, Roma was a schoolteacher and earned $40,000. But she enjoys creating cartoons, so at the beginning of 2014, Roma quit teaching

and set to work as a cartoonist. She stopped renting out her basement for $5,000 a year and began to use it as her office. She used $5,000

from her savings account to buy a new computer, and she leased a printer for $150 a year. During 2010, Roma paid $1,250 for paper,

utilities, and postage; the bank paid 5 percent a year on savings account balances; and Roma sold $50,000 of cartoons. Normal profit is

$3,000 a year. At the end of 2014, Roma was offered $4,000 for her computer. For 2014, calculate Roma’s(Show all the steps of your

calculation for each one of the following to get full credit):

1a.Explicit costs.

1b. Implicit costs.

1c.Economic profit.