The Economics Of Public Issues 12th Edition Roger LeRoy Miller, Daniel K. Benjamin, Douglass Cecil North - Solutions

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Examine the following statements and determine if they are normative or positive in nature. Explain your answers.a. The Euro area of the European Union (EU) is projected to grow by 1.6 percent in 2017, according to a report released by the International Monetary Fund(IMF) in January 2017.b. Miguel
Economists think of almost all human behavior as the outcome of choices. Do you agree with this statement?Based on your reading of the chapter, how would you define economics?
Give examples to explain how economic analysis can be positive and normative.
For a number of years, Japanese carmakers voluntarily limited the number of cars they exported to the United States. What effect do you think this had on Japanese imports of American cars and on American exports of goods and services other than automobiles?
Over the past thirty-five years, some Japanese automakers have opened plants in the United States so that they could produce (and sell) "Japanese" cars here. What effect do you think this had on Amer- ican imports of Japanese cars, Japanese imports of American cars, and American exports of goods
During the late 1980s and early 1990s, American automobile man- ufacturers greatly increased the quality of the cars they produced relative to the quality of the cars produced in other nations. What effect do you think this had on American imports of Japanese cars, Japanese imports of American
In a wealthy country, wages are not only high in the traded-goods and services sector, but also high in the non-traded goods and ser- vices sector. Why? (Hint: Are there two separate labor markets or just one?)
Why does McDonald's provide a six-hundred-page manual to the company's franchises in every country? (Hint: What are the ways that any franchisor can monitor quality of its franchisees?)
Is there anything that a Big Mac preparer in a developing country can do to earn a higher real wage rate?
If the same amount of materials and the same methods are used to produce Big Macs in over one hundred twenty countries, why aren't the prices of Big Macs all the same, expressed in dollars?
Why don't the local prices of restaurant meals, haircuts, and garden- ing services affect a country's exchange rate?
Assume you are going to take a trip to Paris. You buy euros at your local bank or at the airport. Then you start spending them once you are in Paris. Every time you buy something there, you explicitly or implicitly translate the euro price into dollars. Often, you might say to yourself, "How do
The population concentrations of most counties in the United States tend to be located in the middle of each county. Where do you think most landfills are located within each county?
Forty-eight states import garbage from other states or from Canada, while forty-nine states export at least some of their trash. How does interstate trade in trash differ (if at all) from interstate trade in other products?
A community planning on charging a fee for trash pickup might structure the fee in any of several ways. It might, for example, charge a fixed amount per garbage can, a certain amount per pound of gar- bage, or a flat fee per month without regard to the amount of garbage collected. How would each of
Some communities charge for trash pickup based on the number of garbage cans (or bags) that people put out for collection. How do hefty per-can trash pickup fees influence the decisions people make about what goods they will consume?
Why do many communities mandate recycling? (Hint: Could the incentives facing local governments and recycling companies differ from the incentives facing the average citizen?) Is it possible to induce people to recycle more without requiring that all residents recycle?
Some states require that retailers collect (refundable) deposits of a nickel or a dime on every can and bottle they sell. These deposits far exceed the economic value of the can or bottle. How do the deposits affect the incentives of individuals to recycle these products? Is it possible for bottle
Why are foreign producers of products so often the subject of special taxes such as the tax on imported ethanol?
The EPA has approved the use of up to 15 percent ethanol in fuel blends. Cars built before 2007 (especially those built before 2001) are at risk of considerable engine damage if they run on such "E15" fuel. Who will foot the bill for such damages, if they occur?
Some U.S. policy is designed to subsidize exports and thus increase employment in export industries. What effect does such policy have on our imports of foreign goods and thus on employment in indus- tries that compete with imports?
When you go shopping for a new computer, is your real objective to "import" a computer into your apartment or is it to "export" cash from your wallet? What does this tell you about the true object of international trade-is it imports or exports?
Most U.S. imports and exports travel through our seaports at some point. How do you predict that members of Congress from coastal states would vote on proposals to restrict international trade? What other information would you want to know when making such a prediction?
If it would be cheaper to give each steelworker $375,000 per year in cash than to impose restrictions on imports of steel, why do we have the import restrictions rather than the cash payments?
What motivates politicians to impose trade restrictions?
Who gains and who loses from import restrictions?
Who bears the costs and enjoys the benefits of the subsidies men- tioned in the previous question?
The U.S. government subsidizes the export of U.S.-manufactured commercial aircraft. What effect do you think this policy has on American imports of foreign goods and American exports of prod- ucts other than commercial aircraft? Explain.
Until recently, American cars exported to Japan had driver controls on the left side (as in the United States), even though Japanese cars sold in Japan have driver controls on the right side, because the Japanese (like the British) drive on the left side of the road. Sup- pose the Japanese tried to
From 2004 through 2011, the federal subsidy on U.S. ethanol pro- duction was roughly 50 cents per gallon. Use the theory of rational ignorance to explain why the ethanol subsidy was only about 50 cents per gallon rather than, say, $5 per gallon.
Why do you suppose the federal government gives special treat- ment to owners of fertile farmland rather than, say, to automobile mechanics?
Ethanol in the European Union (EU) is made from beets. In 2013 the EU imposed a tariff of about 25 cents per gallon on imports of ethanol from the United States. Explain who wins and who loses due to this tariff. Consider both producers and consumers and consider not just the EU and the United
Brazilian ethanol producers (who make ethanol from sugarcane) have lower production costs than U.S. producers. Until 2012, Congress protected U.S. producers from Brazilian competition by imposing an import tariff of nearly 60 cents per gallon on Brazilian ethanol. If Congress really cares about
Although much credit is given to buffalo hunters for causing the near extinction of bison, there was another factor at work. Cattle are easily herded by men on horseback and readily contained by barbed- wire fences. Bison simply break through ordinary barbed wire and kill (by goring) horses used in
Aquaculture is the business of raising water-dwelling animals, including fish, mollusks (such as oysters), and shellfish (such as shrimp) in enclosed areas. For fish, this means raising them in large net pens. Do you suppose there is a problem with "overfishing" with aquaculture? What is a key
In the United States, most fishing streams are public property, with access available to all. In Britain, most fishing streams are privately owned, with access restricted to those who are willing to pay for the right to fish. Anglers agree that over the past thirty years, the qual- ity of fishing
Is government ownership of animals needed to protect species from extinction?
Some people argue that the best way to save rare species is to set up private game reserves to which wealthy hunters can travel. How could this help save endangered species?
Has there ever been a problem with the extinction of dogs, cats, or cattle? Why not?
Human-caused (anthropogenic) emissions of CO2 are only about 3 percent of total CO2 emissions each year. (Oceans are the biggest emitters.) Why is so much attention directed at anthropogenic emis- sions of CO2?
Suppose the United States decides to discourage CO2 emissions by imposing a tax on them. How large should the tax on CO2 emissions be?
It costs about $100,000 per acre to create wetlands. How reasonable is this number as an estimate of what wetlands are worth?
The policy approach to greenhouse gases will almost certainly involve limits on emissions rather than taxes on emissions. Can you suggest why limits rather than taxes are likely to be used? (Hint: Under which system does a firm that emits one million tons of CO2 pay more taxes? How will this affect
Does the fact that the CO2 produced by one nation results in adverse effects on other nations have any bearing on the likelihood that CO emissions will be reduced to the optimal level? Would the problem be easier to solve if all the costs and benefits were concentrated within a single country?
Why will voluntary actions, undertaken at the individual level, be unlikely to bring about significant reductions in greenhouse gases such as CO? Does this mean that individuals are powerless over greenhouse gases?
Consider a highway with a hot lane and a lane that has no toll. Assume that all cars in the hot lane must pay the toll, no matter how many people are riding in them. What can you predict about the average occupancy of vehicles in the hot lane compared to vehicles in the other lane during rush hour?
Suppose a suburb is connected to a central business district by a single two-lane road. One of these lanes has a toll of $5 for the trip, while the other lane has no toll. If everyone's time is worth $20 per hour, what is the minimum time savings in the toll lane to make it worthwhile for a
Assume that by paying a $5 toll to use a hot lane, you could save six minutes on your commute to work, time that could be used Bur productively in your office. What would your hourly wage rate (or earnings) have to be to justify paying the toll from your perspec- tive? Compare this wage to the
Suppose that when you ate a pizza you only had to pay for the crust but not the toppings. What would happen to (i) the number of pizzas you ate, and (ii) the amount and quality of the toppings on each one? If you faced a price of zero for toppings, after you had fully adjusted to this new pricing,
If the purpose of a toll is to bring the private costs of a driver's actions into equality with the total costs (including congestion), should the size of the toll depend on how many passengers are in the car? Should it depend on the size of the car (or differ between cars, trucks, and busses)?
Rather than tolls, some localities use other means to reduce conges- tion on major routes, for example with access-limiting traffic lights at freeway on-ramps. From an economist's perspective, what are the disadvantages of such a system?
How does the promise of guaranteed Social Security and Medicare benefits affect an individual's decision to save during the years before retirement age?
How would a change in immigration laws that allowed more legal immigration affect the budget crisis we face with Social Security and Medicare?
In general, people who are more productive earn higher incomes and thus pay higher taxes. How would a change in the immigration laws that favored more highly educated and skilled individuals affect the future tax burden of today's American college students? Would the admission of better-educated
When the government taxes younger people to pay benefits to older people, how does this affect the size of the bequests that older people are likely to leave to their children or grandchildren when they die?
When the government taxes younger people to pay benefits to older people, how does this affect the amount of assistance that younger people might voluntarily choose to offer older people?
How do the payroll taxes levied on the earnings of workers affect their decisions about how much leisure they consume?
The inflation-corrected price of cars has gone up over time. But cars purchased today are quite different than those purchased thirty years ago. In particular, today's cars are much safer to drive because they have multiple airbags and more crash-resistant engineering. Additionally, they have
Critics of ever-expanding college enrollments argue that many stu- dents should not be going to college. Rather, they should be going to trade or vocational schools. That way, they could become electri- cians, plumbers, carpenters, or stonemasons. The reasoning is that skilled tradespeople often
Jodi incurs $25,000 in student loans to obtain a bachelor's of sci- ence degree in engineering. Owen undertakes the same course of study, also incurring $25,000 in student loans, but he fails to gradu- ate. Which student will have a higher probability of nonpayment of student loans, and why?
Go to YouTube and find videos in which students are asked to dis- cuss how big their student loans are. If you find that many do not know the actual size of their student loans or underestimate them, are you surprised? Why or why not? Under what circumstances would it be rational for student loan
Assume that Angela incurs $25,000 of student debt to obtain a bachelor's degree in business. Assume that Brian incurs no student debt to obtain the same bachelor's degree in business, but he incurs $25,000 in student loans to obtain an MBA. Which student has the lower probability of defaulting on
If graduating humanities majors can expect to earn lower lifetime incomes, why don't they major in something else?
GMO-free soybeans cost about $2 per bushel more than GMO soy- beans. How many hours does someone have to work to pay that premium in the United States, where average wages are about $25 per hour? How many hours does someone have to work to pay that premium in those African nations where average
The costs of GMO-free foods are said to be higher because these foods must be isolated from GMO crops during both growing and processing. But GMO crops also enable food to be grown on much less land than would otherwise be the case, thus reducing the price of that land. Is it possible that, on
Suppose there are great benefits from transgenic crops, including improved nutrition, longer life spans, reduced infant mortality, and the like. But also assume there are environmental costs, e.g., in the form of some species that are made extinct because they cannot compete with the new transgenic
Suppose one accurately took into account all of the costs and ben- efits of developing transgenic crops. Could you be sure that the economically efficient path to follow would be to permit the devel- opment of GMOs?
How can the tools discussed in Chapters 1 through 3 help us under- stand some of the policy issues involved with GMOs?
How do the potential (environmental and economic) costs of trans- genic crops differ from most of the traditional costs associated with agriculture (such as tractors and labor)? Hint: Who bears the costs: the farmer or others in society? Does this difference mean that we should think and act
Why don't drivers of conventional cars with internal-combustion engines care about whatever pollution they generate?
What are the benefits to consumers who purchase electric cars?
What are some of the arguments that you could use to justify the expansion of wind power and solar power?
Why does the federal government have to provide subsidies to entice a private companies to build and maintain wind farms?
What do we mean when we say that industrial policy leads to inef- ficient use of resources?
Can you think of any situation in which the use of taxpayer dollars to subsidize industrial production of one type or another might benefit the nation in the long run?
Under what circumstances would an employer be willing to pay an annual fine for not providing legally required employee health insurance?
Labor unions are a device for limiting competition, in this instance competition among workers. The union bargains on behalf of all members, presumably resulting in a higher wage for workers and higher costs for employers. Use this fact, combined with the fact that international trade has played an
Although New York City's mass transit system is the largest in the country, it is not the only one that is heavily subsidized by taxpayers in fact, as far as we know, all mass transit systems are heavily subsidized by taxpayers. Suggest at least one economic and one political reason why these
Manicurists and pedicurists are required to be licensed in both Cali- fornia and Florida. In California, people practicing these occupations must take 400 hours of classroom training; in Florida, they must take only 240 hours of classroom training. Ceteris paribus (that is, hold- ing other factors
Is there any difference between prohibiting entry by a group of firms and levying a special tax on those firms?
Although governments at all levels sometimes act to prevent some individuals from competing with others, the federal government is probably the most active in this role, state governments are less active, and local governments are the least active. Can you explain this pattern?
Consider two different ways of beating your competition. One way is to offer your customers lower prices and better service. The other is to get a law passed that raises your competitors' costs-for exam- ple, by imposing special operating requirements on them. Can you see any difference between
Suppose a local beverage shop charges $6 for a six-pack of your favorite beverage and charges $15 for a case (containing four six- packs) of that same beverage? Is this price discrimination?
Suppose a firm starts off with selling a uniform product to two differ- ent customers at the same price per unit for each. Now it decides to engage in price discrimination by raising the price to one customer and lowering the price to the other customer. Why doesn't the profit lost due to lowering
Consider the following data from three different firms (1, 2, and 3) each selling to two different customers (A and B). Shown are the price per unit charged each customer and the marginal cost of pro- ducing each unit for the customer. (Thus, for example, Firm 1 has different marginal costs between
What factors other than income are likely to affect willingness to pay? How will differences in these factors among its customers affect the likelihood that a firm will engage in price discrimination?
Is it price discrimination when a professional football team charges, say, $350 per ticket for fifty-yard-line tickets in the lower deck and $100 per ticket for upper-deck tickets overlooking the end zone?
First-class passengers generally pay higher fares than coach passen- gers, even when they take advantage of advance-purchase discounts. Is this price discrimination? (Hint: Seats in first class are generally leather rather than fabric and are about 50 percent wider than coach seats. Also, there are
Which platform firms are used by online businesses to interact with their customers? That is, which firms are the "platforms for the plat- forms"? How are those platform firms paid? (Hint: Again, a bit of online research will help you answer this.)
Consider the transactions between retailers and customers that involve debit or credit cards. Which firms act as platforms within this two-sided market involving retailers and cardholders? How do those platform firms get paid? (Hint: If you don't already know, a few minutes of online research will
How is YouTube part of a two-sided market? What function does it perform? What are the two audiences that form each side of its two-sided market?
If you were the owner of an online dating service, how would you differentiate your services from those of your competitors? How would such differentiations potentially create a greater demand for your online dating service? What would be your additional costs of providing those differentiations?
In a sense, all transactions in all markets are two-sided. What is the difference between traditional two-sided markets and modern platform-based, two-sided markets? (Hint: How does Amazon differ from your neighborhood Wal-Mart?)
In most cities in the world, it is necessary to purchase an expensive license often called a medallion-to operate a taxi or a taxi com- pany (see Chapter 18 for details). Would you expect the resale price of those medallions to rise or fall in the future, and why?
How does a country's tax structure affect who decides to immigrate into the nation or emigrate out of the nation? Contrast, for exam- ple, nations A and B. Assume that nation A applies a 20 percent tax on every dollar of income earned by an individual. Nation B applies a 10 percent tax on the first
Suppose federal marginal personal income tax rates will rise signifi- cantly over the next ten years. Explain the ways in which individuals at all levels of income can react over time, not just immediately after taxes are raised. How will the size of the response differ, say, a year after the rise
Explain how the incentive effects of each of the following hypotheti- cal taxes would cause people to change their behavior. Be sure to explain what people are likely to do less of and what they are likely to do more of in response to each tax: (a) A $1,000,000-per-story tax on all office buildings
If you found yourself in the 91 percent federal personal income tax bracket in 1951, how great would have been your incentive to find legal loopholes to reduce your federal tax liabilities? If you found yourself in the lowest federal personal income tax bracket of, say, 15 percent, would your
Consider three scenarios. In each, your neighbor offers to pay $500 if you will clear brush out of his backyard this week. Scenario 1: If you decline the offer, you can collect $200 in unem- ployment benefits this week. If you accept the offer, you get to keep the entire $500 without having to pay
Suppose the government spends more this year than it collects in taxes, borrowing the difference. Assuming that the government will repay its debts, what does this imply about what must happen to taxes in the future? How might people adjust their behavior to account for this predicted change in

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The Economics Of Public Issues 12th Edition Roger LeRoy Miller, Daniel K. Benjamin, Douglass Cecil North - Solutions

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