Q1. Describe the given statement: In a competitive market the least-cost production methods are revealed by entry and exit, whereas in public utility regulation they are revealed through commission rate hearings. It is simpler to fool the commission than the market. Thus whenever possible, competition must be permitted.

Q2. Debtors are exploited by creditors as a person who has to borrow is generally in distress and is willing to pay a very high price to get loan. Unless laws were passed controlling the rate of interest, debtors would be forced to pay irrational rates of interest. Is the analysis accurate? Describe why or why not.

Q3. Both monopolists and purely competitive firms are supposed to behave as if they seek to maximize the profits, yet monopoly is held to outcome in an ineffective allocation of resources as compared to the pure competition. Describe. Marginal costs serve as a guide as to how much of a good product, whereas average variable costs help indicate whether to produce at all. Describe.

Q4. The National Teacher's Federation, a teacher's union, advocates a single salary scale in which every teacher, in spite of of specialty, gets the similar salary his first year of teaching, with salary after that tied strictly to years of service. Who would suffer (and why) and who would benefit (why) if that were made universal:

• Men or women?
• Negroes or whites?
• Superior or inferior teachers?
• Mathematics or physical-education teachers?