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What determines the profitability of a physical capital investment? Do human capital investors make profits? If so, what is the source of the profit? Explain.
In which occupation will the hourly wage rate be highest? Why? In which occupation will the annual wage be highest? Why?
Why do some people earn higher wages than others? Why are wages in some occupations higher than in others? How do wage differentials influence the allocation?
How low would the Mexican wage have to be for the firm to reduce its wage cost per unit of output by moving to Mexico?
The last unit of capital hired cost $500 per month and increased output by 80 dresses. Is the dressmaker minimizing costs? If not, what changes need to be made?
If you were interested in maximizing your profits, should you hire a security guard if the wage rate of security guards were $20 per hour?
They often find it quite easy to fill the slots for English and history teachers, but very difficult to find the required number of math and science teachers.
Why are productivity gains the major source of higher wages? If so, how does one account for the rising real wages of barbers.
What price should you charge if you want to maximize your weekly profit? What output should you produce? What is your maximum weekly profit?
The share of airline tickets bought over the Internet has grown rapidly, whereas the percentage of groceries. What factors likely explain this difference?
What effect does the Internet have on the efficiency of markets? Explain. How is the Internet likely to influence productivity and the growth of output?
How do taxes influence the efficiency of resource use? How much does it cost for the government to raise an additional dollar (or $1 billion) of tax revenue?
What is the present value of the ticket when the appropriate rate for discounting the future income is thought to be 10 percent?
What makes an investment profitable? Do profitable investments create wealth? Why or why not? Do all investments create wealth? Discuss.
What happens to average product when marginal product is greater than average product? At what point does marginal cost begin to increase?
Why would anyone ever bid a positive price for a firm operating at a loss?
If the interest rate is 10 percent, what is the expected cost of holding the machine during the next year?
Why should an implicit cost be counted as cost? Give three examples of implicit costs. Does the firm"s accounting statement take implicit costs into account?
Why do economists consider normal returns to capital to be a cost? How does economic profit differ from normal profit?
What are some of the advantages of the corporate business structure of ownership for large business firms? What are some of the disadvantages?
What is the principal-agent problem? When will the principal-agent problem be most severe?
Calculate the price elasticity of demand between $11 and $13. Is the price elasticity of demand between $1 I and $13 elastic, unit elastic, or inelastic?
In contrast, Carole likes both foods and can hardly tell the difference between the two. Who will have the more elastic demand for yogurt?
Is this consumer maximizing his utility? Would you suggest that he buy more jeans and fewer T-shirts, or more T-shirts and fewer jeans?
A bus ticket between two cities costs $50 and the trip will take twenty-eight hours. Why Will Mary take the bus or the plane? Which will Michele take? Explain.