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Why does this seem puzzling, from the perspective of the theory of competitive markets? Why might a profit-maximizing firm offer such a large raise?
Advances in computer technology have enabled some firms to monitor their typists. Would you expect such information to increase productivity? Why or why not?
How might adverse selection cause the amount of work done by the company to fall by more than 10 percent?
Why might the second company be suspicious about whether the worker is really worth $18 per hour? How might the worker attempt to overcome those fears?
How do piece rates provide incentives to work hard? Why is there not a greater reliance on piece-rate systems?
What effect will successful unions have on the level of wages paid by unionized companies? on the capital investment for those companies?
Has the power of unions in the U.S. economy been shrinking or growing in the last few decades? Why? In what sector has union growth been largest?
Would you expect to see greater price dispersion within a metropolitan area, or between several small towns that are fifty miles apart? Why?
Why might it be worthwhile for a profit-maximizing firm to enact such a policy?
Explain how the incentives of someone to look after a car she is renting may not suit the company that is renting the car.
How does imperfect information help explain why used cars cost more when sold by car dealers than by private individuals?
Describe how advertising might affect the demand curve facing a firm. How do these changes affect prices? profits?
What are the benefits of searching for market information? What are the costs? How does the existence of price dispersion affect the benefits?
What role does reputation have in maintaining incentives? What is required if firms are to have an incentive to maintain their reputations?
What are some of the problems in writing contracts that provide for all the relevant contingencies?
Why is signaling unnecessary in a world of perfect information? What does it accomplish in a world of imperfect information?
Why would lemons not be a problem for consumers in a world of perfect information?
How might a cultural or group norm or expectations about correct behavior, such as that summarized in the old saying honor among thieves?
Explain how the substitution effect of the wage increase affects John's decision. Is there an income effect on John of the wage increase?
There is a negative relationship between a woman's real wage and her family size. What evidence might help you choose between these two explanations?
How about a recipient who worked less than 30 hours? more than 30 hours? Explain how the government might reduce these negative effects?
Draw a typical worker's budget constraint. Explain why the budget constraint has a kink at 37 hours of work. Discuss the consequences of the kink in the budget.
Draw a diagram to illustrate this shift in your budget constraint between leisure and consumption. After considering the idea of income and substitution effect.
How does a technological change that makes workers more productive affect the demand for labor at a given wage and price?
What does the labor supply curve look like if income effect dominate substitution effect? What will it look like if substitution effect dominates income effect?