1. What are some externalities associated with cell phone use in cars?

2. You know you would be the ideal candidate for a new job that opened up, but your potential employer doesn’t know any more about you than the other applicants. Furthermore, she has no reason to believe that you are or are not telling the truth during the interview. How might you solve this asymmetric information problem and get the job offer?

3. Imagine you live with a group of people, and one of them has a habit of hanging out in the common room and talking about topics that make everyone else feel very uncomfortable.

4. What are two ways you may try to solve this negative externality problem?

5. What are two ways a country could promote economic growth? Explain.

6. A student chooses to sign up for a Pass/Fail grade instead of a letter grade in a given course.Is this an example of adverse selection or moral hazard? Explain.