Assignment:
If work provides disutility, why do people ever engage in either market work or nonmarket work?
What can cause the demand for a resource to shift?
Why does the division of resource earnings into economic rent and opportunity costs depend on the resource owner's elasticity of supply?
Distinguish between mediation and arbitration. Explain how industrial unions tend to raise wages and why unemployed workers do not offer to work for less money.
What is the price of an hour of leisure? An hour of nonmarket work? What does it mean to say that leisure is a normal good? Why doesn't the market supply curve for labor bend backward?
suppose a third project will cost $20,000 today and yield a return of $2,500 a year indefinitely. What is the present value of the project? What is the present value if the interest rate increases to 20 percent?
"Time is important in roundabout production but not in direct production." Is this statement true or false? Explain. Why does the demand curve for loanable funds slope down? Why does the supply curve for loanable funds slopes upward?
Can the problems of imperfect and asymmetric information be used to enrich Coase's theory of the firm? How?
Describe Coase's theory of the firm.
How does social regulation differ from economic regulation?
Suppose seven people are trying to decide whether to get a pizza with pepperoni, a pizza with sausage and pepperoni, or a pizza with everything on it. Four people want everything, one wants pepperoni and sausage, and two want pepperoni only. Assume that each person prefers a pizza closer to his or her first choice to a pizza that is unlike the first choice. What is the preference of the median voter? Which pizza will be selected if the majority rules?
Distinguish among private goods, public goods, natural monopoly, and open-access goods.
What dilemma faces regulators trying to regulate natural monopolies? What hampered enforcement of the Sherman Act?
What is market power and what are its effects?
Education is often used as an example of a positive externality. Are the external benefits greater for elementary, secondary, or college education? Explain.
Explain how welfare creates work disincentives.
Explain why the optimal level of pollution is not zero. According to an EPA study, the health hazards of Superfund sites have been greatly exaggerated and air pollution tends to be a bigger health hazard than toxic waste dumps. Why is more attention focused on toxic waste dumps than on air pollution?
Explain how property rights and negative externalities are related.
How is the life-cycle pattern of income related to the measurement of income equality at a point in time? What are the differences between social insurance programs and income assistance programs?
What factors determine the demand for British pounds in foreign exchange markets? How are exchange rates determined under a flexible exchange rate system?
Describe developing countries and how they differ from industrial market economies. How can international trade aid development? In
what ways does the international economy impose problems on developing countries?
How can two countries both be better off as a result of trade?
How did the Bretton Woods system operate? What caused its collapse? Some think the current system of managed but floating rates is too unstable. What would generate the instability?
How can tariffs protect U.S. jobs? Do tariffs lead to a net increase in jobs? Explain. Who are the winners and losers from trade restrictions? Given that trade restrictions impose losses on an economy, why are trade restrictions so common?