Question 1. Explain the difference between a closed shop and a union shop. Are either or both shops legal?
Question 2. Answer the following two questions about labor in the auto industry:
A. Suppose the market for autoworkers is initially in equilibrium, but then automakers purchase capital goods that are a substitute for
workers. What happens in the market for autoworkers? Explain
B. Now, suppose the automakers improve working conditions at the plants. What are the effects? Explain
Question 3. How do we determine the optimal quantity of pollution? Why would we not just want the quantity of pollution to be zero?
Question 4. What are the private costs of driving an automobile? What are the external costs?
Project and Analysis Questions
Question 5. How rich are the rich? Wealth statistics on the very rich are compiled every year by Forbes magazine. Answer the following questions:
A. Carefully define wealth, differentiating it from income. Which of these two are more unequally distributed in the US? Why?
B. Find out who are the richest in the US and world at: www.forbes.com - choose lists, then "400 Richest Americans." Select ten individuals for study at random. List and explain your 10 individuals and explain how much wealth they each own. (Make certain that your units are correct.) How did they achieve this wealth?
C. Based on your sample, explain what percentage of individuals gained this wealth through inheritance and what percentage through entrepreneurship
Question 6. For this question, you will be internet searching for some information on the labor market. Search the internet for information on current trends in the US Labor Markets and answer the following 2 questions:
A. Has overall employment been rising or falling during the most recent year? Based on what you learned in your text, what factors might account for this pattern?
B. Have US workers' wages been rising or falling during the most recent year?
Now you will be searching for some information on the minimum wage. Using the website, www.dol.gov or any other sites you wish to use, determine information about the minimum wage. Answer the following questions:
C. What is the current minimum wage in the U.S?
D. What is the minimum wage for workers who receive tips?
E. What is the current minimum wage for the state that you live in?
F. Why was the minimum wage law first enacted?
G. What are the arguments for and against raising the minimum wage?
Question 7. Examine the following marginal costs and marginal benefits associated with air cleanliness in a given locale:
|
Quantity of Clean Air (%)
|
Marginal Cost ($)
|
Marginal Benefit ($)
|
|
0
|
50,000
|
600,000
|
|
20
|
150,000
|
360,000
|
|
40
|
200,000
|
200,000
|
|
60
|
300,000
|
150,000
|
|
80
|
400,000
|
120,000
|
|
100
|
Infinite
|
0
|
A. What is the optimal degree of air cleanliness?
B. What is the optimal degree of air pollution?
C. Suppose that a state provides subsidies for a company to build plants that contribute to air pollution. Cleaning up this pollution causes the marginal cost of air cleanliness to rise by $210,000 at each degree of air cleanliness. What is the optimal degree of air cleanliness after this change?