1. Four social inventions that support markets are (1) ______, which specify the terms of exchange; (2) ______, which reduce the risk of entrepreneurs; (3) ______, which increases the profitability of...

1. Four social inventions that support markets are (1) ______, which specify the terms of exchange; (2) ______, which reduce the risk of entrepreneurs; (3) ______, which increases the profitability of inventions; and (4) ______ rules, which provide potential investors with reliable information about the financial performance of firms. 2. Gold farmers earn a wage of roughly ______ ($0.30, $2.00, $10.00) per hour. It will be sensible for a gamer to buy gold coins rather than earning them in the game if the gamers’ ______ is relatively______. 3. One possible source of comparative advantage of the Shaker garden-seed enterprise is that the Shaker farms were roughly______ times______ (larger/smaller) than traditional farms. 4. Arrow up or down: Trade between different POW compounds ______the difference in the price of beef across the compounds. 5. To explain the virtues of markets, Adam Smith used the metaphor of the invisible pancreas. ______ (True/False) 6. Responding to Higher Prices. Consider the gold farm application. Suppose that the elimination of some gold farmers increases the price of gold coins to $0.50. In addition, suppose the typical gamer can acquire 10 gold coins per hour. a. A gamer will be indifferent between playing for gold coins and buying them if his or her opportunity cost of Wow time is ______. b. As the price of gold coins increases, the number of gamers buying the coins will ______ (increase, decrease). Explain. 7. Coffee and Cheese Exchange in