Question: Answer the following lettered questions on the

> Assume a monopsonistic employer is paying a wage rate of Wm and hiring Qm workers, as indicated in Figure 15.8. Now suppose an industrial union is formed that forces the employer to accept a wage rate of Wc. Explain verbally and graphically why in this i

> Suppose the productivity of capital and labor are as shown in the accompanying table. The output of these resources sells in a purely competitive market for $1 per unit. Both capital and labor are hired under purely competitive conditions at $3 and $1, r

> Florida citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are turning to $100,000 to $300,000 mechanical harvesters known as “trunk, shake, and catch” picke

> Which statement about market structure and innovation is true? a. Innovation helps only dominant firms. b. Innovation keeps new firms from ever catching up with leading firms. c. Innovation often leads to creative destruction and the replacement of esta

> Explain: “The success of a new product depends not only on its marginal utility but also on its price.”

> Some analysts consider oligopolies to be potentially less efficient than monopoly firms because at least monopoly firms tend to be regulated. Arguments in favor of a more benign view of oligopolies include: a. Oligopolies are self-regulating. b. Oligopo

> What assumptions about a rival’s response to price changes underlie the kinked-demand curve for oligopolists? Why is there a gap in the oligopolist’s marginal-revenue curve? How does the kinked-demand curve explain price rigidity in oligopoly? What are t

> Suppose that corn currently costs $4 per bushel and that wheat currently costs $3 per bushel. Also assume that the price elasticity of corn is .10 while the price elasticity of wheat is .15. For the following questions about elasticities, simply use the

> A DVC’s population is growing 2 percent per year and output is growing 3 percent per year. If the government wants to improve living standards over coming decades, which of the following would probably be the best savings rate for the economy? a. 2 perc

> What is the demographic transition? Contrast the demographic transition view of population growth with the traditional view that slower population growth is a prerequisite for rising living standards in the DVCs.

> A meal at a McDonald’s restaurant in New York costs $8. The identical meal at a McDonald’s restaurant in London costs £4. According to the purchasing-power-parity theory of exchange rates, the exchange rate between U.S. dollars and British pounds should

> Suppose that the current Canadian dollar (CAD) to U.S. dollar exchange rate is $.85 CAD = $1 US and that the U.S. dollar price of an Apple iPhone is $300. What is the Canadian dollar price of an iPhone? Next, suppose that the CAD to US dollar exchange ra

> "Exports pay for imports. Yet in 2012 the nations of the world exported about $540 billion more of goods and services to the United States than they imported from the United States." Resolve the apparent inconsistency of these two statements.

> Suppose that the opportunity-cost ratio for sugar and almonds is 4S ≡ 1A in Hawaii but 1S ≡ 2A in California. Which state has the comparative advantage in producing almonds? a. Hawaii. b. California. c. Neither.

> Refer to Figure 3.6, page 63. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of $1, $2, $3, $4, and $5? Use this information to construct the U.S

> Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, in which product

> Use the accompanying tables for Neon and Zeon to answer the questions that follow. Assume that the wage rate shown equals hourly output and income, and that the accumulated output and income are the sum of the marginal revenue products (MRPs) of each wor

> In 2012, an estimated 7.8 million Mexican-born immigrants were employed in the United States. a. If 60 percent of the Mexican-born immigrants remitted money to family members in Mexico in 2012, and if they each sent $100 per month, how much money did the

> Carefully evaluate: “The supply and demand for agricultural products are such that small changes in agricultural supply result in drastic changes in prices. However, large changes in agricultural prices have modest effects on agricultural output.” (Hint:

> How might the output and income gains from immigration shown by the simple immigration model be affected by a. Unemployment in the originating nation b. Remittances by immigrants to the home country, and c. Backflows of migrants to the home country?

> All MegaCorp employees who stay on the job for more than three years are rewarded with a 10 percent pay increase and coverage under a private health insurance plan that MegaCorp pays for. Tina just passed three years as a MegaCorp employee and reacts to

> What are the implications of rapidly rising health care prices and spending for: a. The growth of real wage rates b Government budgets c. Offshoring of U.S. jobs? Explain.

> Suppose that the last dollar that Victoria receives as income brings her a marginal utility of 10 utils while the last dollar that Fredrick receives as income brings him a marginal utility of 15 utils. If our goal is to maximize the combined total utilit

> The desire to maximize profits can work against racial and other types of discrimination. To see this, consider two equally productive accountants named Ted and Jared. Ted is black, and Jared is white. Both can complete 10 audits per month. a. Suppose t

> Why is the lifetime distribution of income more equal than the distribution in any specific year?

> The majority of farm subsidies flow toward ____________. a. Poor, small-scale farmers. b. Rich, large-scale farmers. c. Government employees. d. Grain wholesalers.

> In 2013, it was estimated that the total value of all corn-production subsidies in the United States totaled about $4.8 billion. The population of the United States was approximately 315 million people that year.. a. On average, how much did corn subsid

> The key to efficient resource allocation is shifting resources from low-productivity to high-productivity uses. In view of the high and expanding physical productivity of agricultural resources, explain why many economists want to divert additional resou

> Which of the following is the correct name for the idea that certain firms prefer government regulation because regulation shields them from the pressures of competition and, in effect, guarantees them a regulated profit? a. The public interest theory o

> True or false. Under the “rule of reason” that was established by the Supreme Court in the U.S. Steel case, a monopoly seller should be found guilty of violating antitrust laws even if it is charging low prices to consumers and acting the same way a comp

> Why might one administration interpret and enforce the antitrust laws more strictly than another? How might a change of administrations affect a major monopoly case in progress?

> Identify each of the following taxes as being either progressive or regressive. a. Personal income tax b. Sales taxes c. Payroll taxes d. Property taxes

> What is the most important source of revenue and the major type of expenditure at the federal level?

> Good methods for helping to protect natural resources include: a. Establishing property rights and giving them to local users. b. Encouraging first-come-first-served property rights. c. Teaching people to consider user cost. d. Having the government set

> Eric and Kyle are fishermen with different equipment and, as a result, different costs for catching fish. Eric’s costs for catching fish are $1,000 per ton for the first five tons and then $2,500 per ton for any additional tons. Kyle can harvest fish at

> A community has a nighttime energy demand of 50 megawatts but a peak daytime demand of 75 megawatts. It has the chance to build a 90-megawatt coal-fired plant that could easily supply all of its energy uses even at peak daytime demand. Should it necessar

> Angela puts $1,000 in a savings account that pays 3 percent per year. What is the future value of her money one year from now? a. $970. b. $1,000. c. $1,003. d. $1,030.

> Suppose that the interest rate is 4 percent. What is the future value of $100 four years from now? How much of the future value is total interest? By how much would total interest be greater at a 6 percent interest rate than at a 4 percent interest rate?

> If money is not an economic resource, why is interest paid and received for its use? What considerations account for the fact that interest rates differ greatly on various types of loans? Use those considerations to explain the relative sizes of the inte

> True or false. “To the extent that they succeed in their goals, unions only ever reduce productivity and efficiency.”

> Suppose that there are only three types of fruit sold in the United States. Annual sales are 1 million tons of blueberries, 5 million tons of strawberries, and 10 million tons of bananas. Suppose that of those total amounts, the Sunny Valley Fruit Compan

> What is the estimated size of the union wage advantage? How might this advantage diminish the efficiency with which labor resources are allocated in the economy? Normally, labor resources of equal potential productivity flow from low-wage employment to h

> The market equilibrium wage is currently $12 per hour among hairdressers. At that wage, 17,323 hairdressers are currently employed in the state. The state legislature then sets a minimum wage of $11.50 per hour for hairdressers. If there are no changes t

> Suppose that low‐skilled workers employed in clearing woodland can each clear one acre per month if each is equipped with a shovel, a machete, and a chainsaw. Clearing one acre brings in $1,000 in revenue. Each worker’s equipment costs the worker’s emplo

> Suppose the formerly competing firms in review question 1 form an employers’ association that hires labor as a monopsonist would. Describe verbally the effect on wage rates and employment. Adjust the graph you drew for review question 1, showing the mono

> FreshLeaf is a commercial salad maker that produces “salad in a bag” that is sold at many local supermarkets. Its customers like lettuce but don’t care so much what type of lettuce is included in each bag of salad, so you would expect FreshLeaf’s demand

> Consider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm’s capacity. If he adds one more worker, the firm’s total monthly revenue will increase from $50,000 to $58,000. If he adds one more tractor, monthly revenue

> In each of the following four cases, MRPL and MRPC refer to the marginal revenue products of labor and capital, respectively, and PL and PC refer to their prices. Indicate in each case whether the conditions are consistent with maximum profits for the fi

> The inverted-U theory suggests that R&D expenditures as a percentage of sales __________ with industry concentration after the four-firm concentration ratio exceeds about 50 percent. a. Rise. b. Fall. c. Fluctuate. d. Flat-line.

> In an oligopoly, each firm’s share of the total market is typically determined by: a. Scarcity and competition. b. Kinked demand curves and payoff matrices. c. Homogeneous products and import competition. d. Product development and advertising.

> Both antitrust policy and industrial regulation deal with monopoly. What distinguishes the two approaches? How does government decide to use one form of remedy rather than the other?

> Explain the general meaning of the following profit payoff matrix for oligopolists C and D. All profit figures are in thousands. a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries. b. Assuming no

> Suppose a country’s total output is growing 10 percent per year but its population is growing 11 percent per year. What will happen to living standards? a. Remain the same. b. Fall. c. Rise.

> Explain how each of the following can be obstacles to the growth of income per capita in the DVCs: lack of natural resources, large populations, low labor productivity, poor infrastructure, and capital flight.

> The exchange rate between the U.S. dollar and the British pound starts at $1 = £0.5. It then changes to $1 = £0.75. Given this change, we would say that the U.S. dollar has _________ while the British pound has _____________. a. Depreciated; appreciated

> Refer to following table, in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in year 1, and Qs' is the quantity of yen supplied in year 2. All quantities are in billions and the dollar-yen exchan

> What do the plus signs and negative signs signify in the U.S. balance of payments statement? Which of the following items appear in the current account and which appear in the capital and financial account? U.S. purchases of assets abroad; U.S. services

> True or False: If Country B has an absolute advantage over Country A in producing bicycles, it will also have a comparative advantage over Country A in producing bicycles.

> The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative B and for the United States is alternative U. a. Are comparative

> Explain: “The United States can make certain toys with greater productive efficiency than can China. Yet we import these toys from China.” Relate your answer to the ideas of Adam Smith and David Ricardo.

> True or False. Because older adults have more human capital, they are more likely to migrate to another country than younger adults.

> The city of Joslyn has three sources of revenue: borrowing, proprietary income from running the local electric power utility, and taxes. If it received $10 million from running the electric power utility and borrowed $40 million, how much did it collect

> There is evidence that, other things equal, a 10 percent increase in the number of workers having a particular skill level leads to about a 4 percent decline in wages for workers with that skill level. In addition, this 10-to-4 ratio appears to hold true

> Suppose that the projected lifetime earnings gains from migration exceed the costs of moving. Explain how the decision to move might be reversed when a person considers present value.

> A patient named Jen visits Dr. Jan. Dr. Jan is nearly certain that Jen only has a cold. But because Dr. Jan is afraid of malpractice lawsuits, she orders an extensive battery of tests just to make sure that Jen can never claim—if she turns out to have so

> Preventive care is not always cost effective. Suppose that it costs $100 per person to administer a screening exam for a particular disease. Also suppose that if the screening exam finds the disease, the early detection given by the exam will avert $1000

> Briefly describe the main features of Medicare and Medicaid, indicating how each is financed.

> Suppose that a society contains only two members, a lawyer named Monique and a handyman named James. Five years ago, Monique made $100,000 while James made $50,000. This year, Monique will make $300,000 while James will make $100,000. Which of the follow

> In 2015, many unskilled workers in the United States earned the federal minimum wage of $7.25 per hour. By contrast, average earnings in 2015 were about $23 per hour, and certain highly skilled professionals, such as doctors and lawyers, earned $100 or m

> How does the Gini ratio relate to the Lorenz curve? Why can’t the Gini ratio exceed 1? What is implied about the direction of income inequality if the Gini ratio declines from 0.42 to 0.35? How would one show that change of inequality in the Lorenz diag

> Suppose that the government has been supporting the price of corn. Its free market price is $2.50 per bushel, but the government has been setting a support price of $3.50 per bushel. Which of the following are ways that the government might try to reduce

> Suppose that 10 workers were required in 2010 to produce 40,000 bushels of wheat on a 1,000-acre farm. a. What is the average output per acre? Per worker? b. If in 2020 only 8 workers produce 44,000 bushels of wheat on that same 1,000-acre farm, what wil

> Suppose a tax is such that an individual with an income of $10,000 pays $2,000 of tax, a person with an income of $20,000 pays $3,000 of tax, a person with an income of $30,000 pays $4000 of tax. What is each person’s average tax rate? Is this tax regres

> Explain how each of the following contributes to the farm problem: a. The inelasticity of demand for farm products. b. The rapid technological progress in farming. c. The modest long-run growth in demand for farm commodities. d. The volatility of export

> When confronted with a natural monopoly that restricts output and charges monopoly prices, the two methods that governments have for promoting better outcomes are: a. Public ownership and public regulation. b. Sole proprietorships and public goods. c. A

> Contrast the outcomes of the Standard Oil and U.S. Steel cases. What was the main antitrust issue in the DuPont cellophane case? In what major way do the Microsoft and Standard Oil cases differ?

> The nation of Upstandia uses kroner for money and its tax code is such that a person making 100,000 kroner per year pays 40,000 kroner per year in income taxes; a person making 200,000 kroner per year pays 70,000 kroner per year in income taxes; and a pe

> For tax purposes, “gross income” is all the money a person receives in a given year from any source. But income taxes are levied on “taxable income” rather than gross income. The difference between the two is the result of many exemptions and deductions.

> What are the main categories of government spending? What are the main categories of government revenue?

> After mining 9,273 tons of coal, Blue Sky Mining’s managers note that the marginal cost of mining the next ton of coal would be $40 per ton. They also calculate that the user cost of mining that next ton of coal would be $35. If the market price of coal

> Suppose that Sea Shell oil company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 10 million barrels it pumps each year and then $60 per barrel for all subsequent barrels t

> Resource consumption per person in the United States is either flat or falling, depending on the resource. Yet living standards are rising due to improvements in technology that allow more output to be produced for every unit of input used in production.

> The main argument put forth by advocates of the single-tax movement was that: a. Taxing only income would make for a more equal society. b. Taxing only land would be very efficient because taxing land does not decrease its supply. c. Taxing only import

> Use a circular flow diagram to show how the allocation of resources and the distribution of income are affected by each of the following government actions. a. The construction of a new high school. b. A 2-percentage-point reduction of the corporate inco

> Which industries and occupations have the highest rates of unionization? Which the lowest? Speculate on the reasons for such large differences.

> Evaluate free pizza as a form of sales promotion in Pepe’s success.

> Why is heterogeneity particularly important to credit card customers?

> How has AXE used line extensions to increase its reach among consumers?

> How does international marketing differ from domestic marketing?

> Why are younger generations attracted to AXE products?

> How has AXE managed its product mix?

> What are the benefits and disadvantages of test marketing?

> What methods would you use to evaluate the effectiveness of your advertising campaign?

> What class and type of advertising would be most appropriate for your product?

> Why does greenwashing have such a negative impact?

> What are some actions organizations are taking to demonstrate a genuine commitment toward sustainability?

> What are some ways that stakeholders have dissuaded greenwashing?

> Describe Starbucks’ global strategy. Is it engaging in more of a globalization or customization approach?

> Why is product development a cross-functional activity—involving finance, engineering, manufacturing and other functional areas— within an organization?

> Do small companies that manufacture just a few products need to be concerned about developing and managing products? Why or why not?