When asked for investment advice, humorist Will Rogers joked that people should "buy land. They ain't making any more of the stuff." Explain his advice in terms of the supply and demand model.
> Use the ideas of consumer surplus and producer surplus to explain why economists say competitive markets are efficient. Why are below- or above-equilibrium levels of output inefficient, according to these two sets of ideas?
> Consider the market for coffee beans. Suppose that the prices of all other caffeinated beverages go up 30 percent while at the same time a new fertilizer boosts production at coffee plantations dramatically. Can you tell what will happen to the equilibri
> The table below shows two demand schedules for a given style of men’s shoes—that is, how many pairs per month will be demanded at various prices at a men’s clothing store in Seattle called Stromnord.
> Most scalping laws make it illegal to sell—but not to buy—tickets at prices above those printed on the tickets. Assuming that is the case, use supply and demand analysis to explain why the equilibrium ticket price in an illegal secondary market tends to
> True or False: A “change in quantity demanded” is a shift of the entire demand curve to the right or to the left.
> The figure below shows the supply curve for tennis balls, S1, for Drop Volley tennis, a producer of tennis equipment. Use the figure and the table below to give your answers to the following questions. a. Use the figure to fill in the quantity supplied o
> Briefly explain the use of graphs as a way to represent economic relationships. What is an inverse relationship? How does it graph? What is a direct relationship? How does it graph?
> What are the determinants of demand? What happens to the demand curve when any of these determinants change? Distinguish between a change in demand and a movement along a fixed demand curve, noting the cause(s) of each.
> Match each term with the correct definition. Private property Freedom of enterprise Mutually agreeable Freedom of choice Self-interest Competition Market a. An institution that brings buyers and sellers together. b. The right of private persons and firm
> Suppose Natasha currently makes $50,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In one, she will quit her job to start an organic soap company. In the other, she will try
> How does self-interest help achieve society’s economic goals? Why is there such a wide variety of desired goods and services in a market system? In what way are entrepreneurs and businesses at the helm of the economy, but commanded by consumers?
> Erin grows pecans. The number of bushels (B) that she can produce depends on the number of inches of rainfall (R) that her orchards get. The relationship is given algebraically as follows: B = 3,000 + 800R. Match each part of this equation with the c
> Indicate how each of the following might affect the data shown in the table and graph in Figure 2 of this appendix: a. GSU’s athletic director schedules higher-quality opponents. b. An NBA team locates in the city where GSU plays. c. GSU contracts to ha
> Describe the graphical relationship between ticket prices and the number of people choosing to visit amusement parks. Is that relationship consistent with the fact that, historically, park attendance and ticket prices have both risen? Explain.
> Indicate whether each of the following statements applies to microeconomics or macroeconomics: a. The unemployment rate in the United States was 5.1 percent in September 2015. b. A U.S. software firm discharged 15 workers last month and transferred the
> Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or at other potential jobs. One potential job,
> What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greater opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocat
> Match each term with the correct definition. Economics Opportunity cost Marginal analysis Utility a. The next best thing that must be foregone in order to product one more unit of a given product. b. The pleasure, happiness, or satisfaction obtained fro
> People drive faster when they have auto insurance. This is an example of: a. Adverse selection. b. Asymmetric information. c. Moral hazard.
> Consider a used-car market with asymmetric information. The owners of used cars know what their vehicles are worth but have no way of credibly demonstrating those values to potential buyers. Thus, potential buyers must always worry that the used car th
> Because medical records are private, an individual applying for health insurance will know more about his own health conditions than will the insurance companies to which he is applying for coverage. Is this likely to increase or decrease the insurance
> Refer to Table 4.1 below. If the six people listed in the table are the only consumers in the market and the equilibrium price is $11 (not the $8 shown), how much consumer surplus will the market generate? TABLE 4.1 Consumer Surplus (2) (3) Maximum P
> Explain the two causes of market failures. Given their definitions, could a market be affected by both types of market failures simultaneously?
> Will the the equilibrium price of orange juice increase or decrease in each of the following situations? a. A medical study reporting that orange juice reduces cancer is released at the same time that a freak storm destroys half of the orange crop in Fl
> What explains why millions of economic resources tend to get arranged logically and productively rather than haphazardly and unproductively?
> How does shielding employees and suppliers from business risk help to improve economic outcomes? Who is responsible for managing business risks in the market system?
> Demand and supply often shift in the retail market for gasoline. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in Maine. Some of the data is missing. a. Use the following facts to fill in t
> Studies indicate that married men on average earn more income than unmarried men of the same age and education level. Why must we be cautious in concluding that marriage is the cause and higher income is the effect?
> Distinguish between the resource market and the product market in the circular flow model. In what way are businesses and households both sellers and buyers in this model? What are the flows in the circular flow model?
> Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9,000 piz
> In market economies, firms rarely worry about the availability of inputs to produce their products, whereas in command economies input availability is a constant concern. Why the difference?
> Specify and explain the typical shapes of marginal-benefit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefit
> Distinguish between a carbon-tax and a cap-and-trade strategy for reducing carbon dioxide and other so-called greenhouse gases (that are believed by many scientists to be causing global warming). Which of the two strategies do you think would have the mo
> A price ceiling will result in a shortage only if the ceiling price is ____________ the equilibrium price. a. less than b. equal to c. greater than d. louder than
> In a sentence, describe the meaning of the phrase “invisible hand.”
> Why is money not considered to be a capital resource in economics? Why is entrepreneurial ability considered a category of economic resource, distinct from labor? What are the major functions of the entrepreneur?
> Explain why zoning laws, which allow certain land uses only in specific locations, might be justified in dealing with a problem of negative externalities. Explain why in areas where buildings sit close together tax breaks to property owners for installin
> Why are shortages or surpluses more likely with preset prices, such as those on tickets, than flexible prices, such as those on gasoline?
> Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the table below. Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to es
> Real (inflation-adjusted) tuition costs were nearly constant during the 1960s despite a huge increase in the number of college students as the very large Baby Boom generation came of age. What does this suggest about the supply of higher education durin
> Ted and Fred are the owners of a gas station. They invested $150,000 each and pay an employee named Lawrence $35,000 per year. This year revenues are $900,000, while costs are $940,000. Who is legally responsible for bearing the $40,000 loss? a. Lawrenc
> What is meant by the term “creative destruction”? How does the emergence of MP3 (or iPod) technology relate to this idea?
> In the accompanying graph, is the slope of curve AA’ positive or negative? Does the slope increase or decrease as we move along the curve from A to A’? Answer the same two questions for curve BB’.
> Because investment and capital goods are paid for with savings, higher savings rates reflect a decision to consume fewer goods for the present in order to be able to invest in more goods for the future. On average, households in China save 40 percent of
> What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?
> Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: “The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for oth
> Look at Tables 4.1 and 4.2, which show, respectively, the willingness to pay and willingness to accept of buyers and seller of bags of oranges. For the following questions, assume that the equilibrium price and quantity will depend on the indicated chang
> The LoJack car recovery system allows the police to track stolen cars. As a result, they not only recover 90% of LoJack-equipped cars that are stolen but also arrest many auto thieves and shut down many “chop shops” that take apart stolen vehicles to get
> What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? a. Small automobiles become more fashionable. b. The price of large automobiles rises (with the price of small autos remaining the same
> Label each of the follow scenarios with the correct combination of price change and quantity change. In some scenarios, it may not be possible from the information given to determine the direction of a particular price change or a particular quantity cha
> Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below. a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? b.
> What do economists mean when they say “price floors and ceilings stifle the rationing function of prices and distort resource allocation”?
> Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills in order to open up and run a coffee shop. They will share any profits or losses that the business generates and will be personally responsible for making
> Some large hardware stores such as Home Depot boast of carrying as many as 20,000 different products in each store. What motivated the producers of those individual products to make them and offer them for sale? How did the producers decide on the best c
> The accompanying graph shows curve XX’ and tangents at points A, B, and C. Calculate the slope of the curve at these three points. 50 (12, 50) ,a c' (16, 50) B 40 30 A (2, 10) (26, 10) 10 Graph for Problem 7 O 2 4 6 8 10 12 14 16 18
> What are the two major ways in which an economy can grow and push out its production possibilities curve? a. Better weather and nicer cars. b. Higher taxes and lower spending. c. Increases in resource supplies and advances in technology. d. Decreases in
> Referring to the table give below: suppose improvement occurs in the technology of producing forklifts but not in the technology of producing automobiles. Draw the new production possibilities curve. Now assume that a technological advance occurs in prod
> How does the slope of a budget line illustrate opportunity cost and trade-offs? How does a budget line illustrate scarcity and the effect of limited incomes?
> Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below. a. Fill in the table for the missing values. b. Which buyer demands the lea
> Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subseque
> What should be done to restore the reputation of the CAI?
> Why would CAI want to keep Mortenson in a “visionary” capacity?
> From a business ethics perspective, which was worse, the conduct of the CAI board or the conduct of Mortenson himself? Why?
> Do people have the right to seek assistance in dying?
> What might the phrase “right to die” mean?
> Does being near the end of one’s life make the decision to end it justified?
> Critics of Milgram’s research have argued that the physical separation between the participant and the teacher in one room and the learner in the other made it easier for the participant to inflict the shocks. Do you think that made a difference? Why or
> If Mortenson’s claims have misled donors, should the CAI return the money? Why or why not?
> How does the conduct of the CAI board relate to this case?
> Would the CSR policies of an organization influence your decision to use their products or services? Why or why not?
> How could this issue of patient privacy have been handled in a more ethical manner?
> Based on the evidence presented in this case study, was Mortenson’s work at the CAI an example of deliberate fraud or mismanagement? Defend your position.
> Do people have the right to give assistance in dying?
> The participants were introduced to the learners as equal participants in the study—that is, volunteers just like them. Do you think that made a difference in the decision to keep increasing the voltage? Why?
> Divide into two groups and prepare arguments for and against the following behavior: One rainy evening I wandered into a shop, where I left my name-brand umbrella in a basket near the door. When I was ready to leave, my umbrella was gone. There were seve
> Divide into two groups and prepare arguments for and against the following behavior: My friend works for a company that manages fund-raising events for nonprofit organizations—mostly gala benefits and auctions. Since these events all take place in the sa
> Divide into two groups and prepare arguments for and against the following behavior: I’m a regular customer of a men’s clothing mail-order company, and it sends me new catalogs about six times a year. I usually order something because the clothes are goo
> Divide into two groups and prepare arguments for and against the following behavior: My dad takes me to a lot of baseball games and always buys the cheapest tickets in the park. When the game starts, he moves to better, unoccupied seats, dragging me alon
> Why do we study ethics?
> What would you do if your resolution of an ethical dilemma turned out to be the wrong approach and it actually made things worse?
> Consider how you have resolved ethical dilemmas in the past. What would you do differently now?
> What should VW be doing to recover from this scandal?
> Would organizations really be paying attention to CSR if customers and federal and state agencies weren’t forcing them to? Why or why not?
> Is it unrealistic to expect others to live by the Golden Rule?
> If each of us has a unique set of influences and values that contribute to our personal value system, how can that be applied to a community as a whole?
> Why should we be concerned about doing “the right thing”?
> You are riding in a taxicab and notice a $20 bill that has obviously fallen from someone’s wallet or pocketbook. What do you do?
> You buy a candy bar at the store and pay the cashier with a $5 bill. You are mistakenly given change from a $20 bill. What do you do?
> You are the manager of a nonprofit orphanage. At the end of the year, a local car dealer approaches you with a proposition. He will give you a two-year-old van worth $10,000 that he has just taken as a trade-in on a new vehicle if you will provide him wi
> You are shopping in a department store and observe a young man taking a watch from a display stand on the jewelry counter and slipping it into his pocket. What do you do?
> You are having a romantic dinner with your spouse to celebrate your wedding anniversary. Suddenly, at a nearby table, a man starts yelling at the young woman he is dining with and becomes so verbally abusive that she starts to cry. What do you do?
> You live in a small Midwestern town and have just lost your job at the local bookstore. The best-paying job you can find is at the local meatpacking plant, but you are a vegetarian and feel strongly that killing animals for food is unjust. What do you do
> Has Müller’s commitment to “maximum transparency” helped or hindered the situation? Explain your answer.
> Visit the Center for the Study of Ethics in the Professions (CSEP) at the Illinois Institute of Technology: http://ethics.iit.edu. a. What is the stated mission of CSEP? b. Identify and briefly summarize a current CSEP research project. c. Explain the pu
> Consider the company you currently work for (or one you have worked for in the past). What initiatives could they start to be more socially responsible? How would you propose such changes?
> Has BP been successful in its move “Beyond Petroleum”?
> If Wakefield had disclosed the source of the funding of his study and his interest in the experimental vaccine, would that have added credibility to his campaign against MMR? Why or why not?
> Why did Wakefield lose his license to practice medicine?
> What were the perceived conflicts of interest in Wakefield’s research activities?
> How can BP begin to restore its reputation going forward?
