Chapter 1 :

1)1-2 Goal Alignment at a Small Manufacturing Concern (cont.)

Does this contract align the incentives of the new vice president with the profitability goals of the owners?

2)1-3 Goal Alignment at a Small Manufacturing Concern (cont.)

Redesign the contract to better align the incentives of the new vice president with the profitability goals of the owners.

Chapter 2:

3)2-2 Selling Used Cars

I recently sold my used car. If no new production occurred for this transaction, how could it have created value?

4)2-3 Flood Insurance

The U.S. government subsidizes flood insur- ance because those who want to buy it live in the flood plain and cannot get it at reasonable rates. What inefficiency does this create?

Chapter 3:

5)3-2 Concert Opportunity Cost 2

You were able to purchase two tickets to an upcoming concert for $100 apiece when the con- cert was first announced three months ago. Recently, you saw that StubHub was listing simi- lar seats for $225 apiece. What does it cost you to attend the concert?

6)3-3 Housing Bubble

Because of the housing bubble, many houses are now selling for much less than their selling price just two to three years ago. There is evidence that homeowners with vir- tually identical houses tend to ask for more if they paid more for the house. What fallacy are they making?

Book link:

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