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If the prices of homes go up by 5% and the prices of concert tickets rise by 10%, which will have the larger impact on the CPI? Why?
What three issues are at the center of the debate regarding the accuracy of the CPI? Please give an example of each issue.
Adjusting for inflation, how much did the price of laptops change? Does this answer seem right to you, or is it missing something?
What is the labor force participation rate? If 5 million of the unemployed become discouraged and stop looking for work, what is the new unemployment rate?
What is the size of the labor force? What is the unemployment rate? What is the natural rate of unemployment for this country?
Why do you think the loss of manufacturing jobs was so difficult on the workers in areas like Allentown. What type of unemployment is the song about?
What groups does the Bureau of Labor Statistics count in the labor force?
What type of unemployment is affected when online job search engines reduce the time necessary for job searches?
The news media almost always bemoans the current state of the U.S. economy. How does the most recent unemployment rate relate to the long-run average?
Define and explain the two types of unemployment that are consistent with a dynamic, growing economy.
A local pizza restaurant charges full price for first pizza but offers 50% off on a second pizza. Using marginal utility, explain restaurant's pricing strategy.
If you get 30 utils from the last pound of cashews you consume, how many utils would you have to get from last pound of trail mix to be in consumer equilibrium?
At which restaurant are you likely to obtain the most marginal utility from the last slice you eat? Explain your response.
If the price of a cup of coffee rises to $3, what would you expect to happen to the amount of coffee and muffins this person consumes?
How do dollar stores survive when none of the items sold brings a high amount of total utility to consumers?
However, a sale has lowered the total cost of going to Cancun to $800. Does this change create a substitution effect, a real-income effect, or both? Explain.
Why are ties so much more expensive than underwear if the demand for underwear is so much greater than the demand for ties?
What is bounded rationality? How is this concept relevant to economic modeling? What are the hot hand fallacy and the gamblers fallacy? Give an example of each.
Economists use the ultimatum game to test judgments of fairness. What result does economic theory predict?
What is prospect theory? Have you ever suffered a setback early in a process that caused you to alter your behavior later on?
You decide to take the $50,000 job. On the basis of this decision, can we tell if you are risk averse or a risk taker? Explain your response.
If Danny Ocean plays roulette and wins big, is this evidence that Danny is risk averse or a risk taker? Explain.
What idea, discussed in this chapter, explains why so many people actually vote?
What answer would you give if you believed in the gambler's fallacy? What answer would you give if you believed in the hot hand fallacy?
What would traditional economic theory predict? What would behavioral economics predict?