1.1 For each of the following events, ceteris paribus, explain whether the production possibility frontier shifts inward, shifts outward or remains unchanged. Use a single diagram to motivate your answer.

1.1.1 The discovery of coal.

1.1.2 Training for workers that increases the amount of a good that can be produced per worker.

1.1.3 A shift in preference for one good compared to the other good.

1.1.4 Invention of a new process of production that reduces the resources necessary to produce a good.

1.2 “Market structure refers to the nature and degree of competition in the market for goods and services. There are a number of determinants of market structures for a particular good.” In terms of the statement above, discuss the following determinants for the four main types of market structures.

1.2.1 Nature of product

1.2.2 Entry and exit conditions

1.2.3 Economies of scale

Unemployment is a state that almost everyone experiences at some point in his or her career. For this assignment, you will write a two- to three-page essay on economic issues associated with unemployment.

Instructions

1. Research and write a short essay in which you describe how labor unions, the theory of efficiency wages, and the minimum-wage law affect the labor market. Your essay should answer the following questions:

• In what industries do labor unions play a significant role? How do labor unions affect unemployment?
• Describe how minimum wage works in the US. How does the minimum-wage law affect the unemployment rate? What is the connection between labor unions and minimum wage?
• What is the theory of efficiency wages and what impact does it have on unemployment?

Smokey's Garage, Inc., provides routine auto diagnostics for customers in the Atlanta, Georgia, metropolitan area. Tests are supervised by skilled mechanics using equipment produced by two leading competitors in the auto test equipment industry. Staff at the company estimate that 4 tests per hour could be performed if they added another Sunny Tune System (STS) machine and 6 tests per hour could be performed on a new machine, the Car Care Tower (CCT). The STS can be leased at a cost of $5,000 per month, and the CCT can be leased at a rate of $9,000 per month. Labor to operate either of the machines would cost $3,000 per month. All other costs are fixed. On average, each machine is operated 25 eight-hour days per month. Smokey’s receives $15 for each test performed.

A. Compute and interpret the net marginal revenue products for the two types of equipment?

B. Should the company lease more STS machines? What about more CCT machines? Explain your answer.

Using OLS estimation methodology, the study of Morelli and Smith (2015) uses a cross sectional data of 2490 cars for the year 2013 to estimate the factors affecting the price of automobiles in the state of California. The estimation results of regressing the price variable on a set of explanatory variables are shown in Model (1), where the numbers in parentheses are the robust standard errors of the coefficients.

????? = 5647.02 + 5.77 ????ℎ? + 23.64 ??? + 3573.09 ???????      (1)

              (1042.20)      (1.50)              (13.74)            (1230)

???_?^2= 0.65, ? = 2490

Where price is in U.S. dollars, weight is in pounds, mpg is the number of miles per gallon, and foreign is a dummy variable that takes 1 if the ith car is foreign and 0 if domestic.

1. Interpret the above results and discuss whether the signs and statistical significance of the coefficients are as expected.
2. What is the predicted price for a Buick Regal car that weights 3,450 lbs. and with 22 mpg? And what is the predicted price for a Toyota Corolla that weights 2,310 lbs.and with 18 mpg?
3. If in the year 2013 the actual price of Buick Regal was $25,500 and that of Toyota Corolla was $23,640, use the results of point (b) to determine whether your model over or under predicting the price of each car?
4. In one specification, the authors have included the length of the ith car, length, as an additional regressor to Model (1), where length is measured in inches. The resulting regression results are shown in Model (2) as follows,

              ????? = 5524.02 + 6.54 ????ℎ? + 22.73 ??? + 3568.11 ??????? − 93.48 ?????ℎ       (2)

   (1033.10) (4.85)               (13.68)             (1232)                      (32.87)

???_?^2 = 0.92, ? = 2490

If the F-statistic of the coefficients of the four included variables in Model (2) is equal to 54.32, does the inclusion of the variable length in Model (2) creates an econometric problem? Explain in details.

5. In one last specification of the model, the authors have included the size of the trunk of the ith car, trunk, as an additional regressor to Model (1), where trunk is measured in cubic feet. The resulting regression results are shown in Model (3) as follows,

               ????? = 5631.24 + 4.95 ????ℎ? + 25.99 ??? + 3650.22 ??????? + 88.31 ????? (3)

                         (1144.67)    (1.62)              (13.54)             (1285.29)                 (44.38)

???_?^2 = 0.75, ? = 2490

Suppose that the correlations between the variable trunk and the variables price, weight, mpg, and foreign are equal to 0.25, 0.49, -0.38, and -0.36, respectively. Based on these correlations, refer to Model (1) and discuss the direction of the bias of each coefficient of the three included variables. What is your opinion about including the variable trunk as an additional regressor in Model (3)? Does the inclusion of the variable trunk violate any of the OLS assumptions? Explain in details.

Suppose that there are four people who enjoy a public good. One person has a willingness to pay for the public good of 20 - Q, while the other three each have a willingness to pay of 10 -Q/3.

a) Derive the aggregate willingness to pay?

b) Suppose that the marginal cost of providing the public good is 10. What is the efficient level of the public good, and how much will be supplied if there is no policy in place?

c) What is the deadweight-loss loss relative to the efficient solution - if there is no policy in place?

1. A million dollar lottery winner decides to quit working. How can you explain this behavior using economics?

2. How does outsourcing affect wages and unemployment in the short run and the long run?

3. If workers became more productive (produced more output in the same amount of time), what would happen to the demand for labor, the wages of labor, and the number of workers employed?

4. Why is it difficult to determine the amount of wage discrimination in the workplace?

5. Which anti-poverty program (welfare, in-kind transfer, or EITC) creates the strongest incentive for recipients to work? Why?

Briefly synopsize your understanding of how financial markets function. In addition, give your observation or perception on the failings of Financial Markets to certain segments of the population.

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What did Smith mean by the Division of Labor and why did he see it as crucial to explaining the Wealth of Nations? What is the cause of the Division of Labor, for Smith? How does the division of labor increase productivity, in his view? What is the effect on workers? Explain how Smith's work on the division of labor challenges the standard neo-classical account of the economy built on the assumption of constant returns, and how it supports a different argument for free trade than we get from Ricardo's theory of comparative advantage

Does it still make sense to you to start counting people as either in or out of the labor force at 16 years old, or do you think this age is unrealistic in our modern society?

How did Franklin Roosevelt seek to pull the U.S. out of the Great Depression? To what extent did his policies work?

a. Josiah Bartlett collects 2 goods, carving knives (C) and antique books (B). His utility function is U(C, B) = 2C + B (they are perfect substitutes). Find Josiah’s demand curve for carving knives if he has $100 to spend and the price of antique books is $10.

b. Josiah's assistant Charlie collects the same two goods but has a different utility function: U(C, B) = min{2C, B} (they are perfect complements). Find Charlie’s demand curve for carving knives if he has $100 to spend and the price of antique books is $10.

Do you think the numerous state agencies in Texas reflect democracy in action, or do they work against the ideal of democracy? Give reasons for your answer.

Prepare a summary report of Migros Ticaret A.Ş. retail company which will open new stores in Bulgaria consisting of the following components .

1. An overview of economic conditions that might affect start-up costs and financing alternatives for the proposed global business enterprise.
2. A description (and estimate of amounts) of the necessary start-up costs.
3. A synopsis of financing alternatives that might be used in this situation.
4. Recommend actions that might be taken to obtain financing for the proposed global business enterprise.  Provide evidence to support your recommendations.

The Caribbean needs sustainable development.What is the extent to which it is feasible for the Caribbean to practice sustainable tourism?

1. Low interest rates, at the zero lower bounds, are testing the limits of the conventional IS-LM model. Briefly explain what the lower zero bound means and what it would imply for the shape of the LM curve. Why would monetary policy be ineffective in this environment?