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which is restricted to keeping profits for less than they could have earned, be more likely to discriminate than if its profits were not limited?
Why would large-scale government redistribution tend to reduce hours worked, savings and investment, and human capital (education)?
Evaluate the advantages and disadvantages of each system. Which of these two alternatives would you prefer?
How could food stamp benefit reductions as income rises cause the program to actually decrease measured incomes of the poor and raise official poverty rates?
Why would inequality measured by current consumption tend to be smaller than inequality measured by current income?
If every individual earned the same total income over his or her lifetime, why would we still see inequality at a given point in time?
A newly released study demonstrates that populated areas with significant air pollution caused by diesel engines. What sorts of results would you expect?
Why does internalizing externalities with taxes or subsidies sometimes increase the prices of goods and sometimes decrease them?
How might subsidy affect the market for recycled materials? Illustrate using a demand and supply diagram.
What would be the result of taxing an industry that produces external benefits? Subsidizing an industry that produces external cost?
If a firm can reduce its sulfur dioxide emissions for $30 per ton, but it owns tradable. What will the firm want to do if it is trying to maximize profits?
Evaluate whether a change in law is necessary to achieve an efficient outcome in this situation.
Why does text argue that lower air pollution taxes should be charged to drivers in less-populated areas? What if air pollution quickly spread throughout world?
If an industry created both external benefits and external cost, would a tax or subsidy be appropriate? Why would someone be hurt by either one?
How can health care expenditures be viewed as similar to other investments in capital equipment and education (human capital)?
Why would the percentage that health care consumers pay out of pocket be an important determinant of how much care they receive?
If selling of kidneys were legalized, predict impact on market for organ transplants using supply and demand analysis. Why might the quantity supplied increase?
How about Mickey Mantle, a famous baseball player who battled alcoholism? Do these queries fall into the realm of normative or positive economic analysis?
Why do adverse selection mean that lunch insurance, which would pay for lunch if you choose to eat it, is never likely to be a commercial success?
How does insuring all the workers at a given firm tend to reduce adverse selection problems? How does requiring physical exams have a similar effect?
Starting from the situation in (a), what would happen to the labor force participation rate if 30 million people lost their jobs and all of them exited the labo
If 10 million new jobs were created in the country, and it attracted 20 million. What would the new labor force participation rate and new unemployment rate be?
Can you explain why some restaurants are highly profitable while other restaurants in the same general area are going out of business?
Suppose that half the restaurants in a city are closed so that the remaining eateries can operate. What cost might restaurant patrons incur as a result?
How does Starbucks differentiate its product? Why does Starbucks stay open until late at night but a donut or bagel shop might close at noon?