Questions and Answers of Economics Today The Micro View

For years, managers at Procter & Gamble, the consumer products family, told warehouse workers to pack a truck full of detergent and send it out to make deliveries to retailers, then pack the next
At FedEx, the marginal cost incurred in delivering packages speedily often encompasses more than just the expense of physically transporting a package from one location to another. The additional
Since 1970, the nations of the European Union (EU) have increased their total annual output of goods and services relatively steadily. But over this same time period, the EU has dramatically
In the 1980s, many firms in China were government-sponsored enterprises that were either owned by the government or received large government subsidies. Since the 1990s, the Chinese government has
One of the great success stories of the computer age has been Microsoft’s Windows, the dominant PC operating system. Many businesses also rely on another Microsoft desktop software package called
Traditionally, manufacturers have relied on clay models to create three-dimensional images of what products on the drawing board might look like once they were constructed. Increasingly, however,
Automated Clearing Houses (ACHs) process both private payments, such as automatic deposits to wage-earners bank accounts, and public payments, such as direct deposits of Social Security stipends. The
Since the mid-1990s, individuals have been using online auction sites such as eBay, uBid, and Yahoo! to sell off old clothes, collectibles, and other used items that they find when cleaning out
Since the late 1990, discount retailers such as Walmart and Costco from the United States and Carrefour from France have entered the Japanese discount-store industry. To be able to reduce their
Catholic monks in western Wisconsin who were using laser printers to create documents wondered why replacement toner cartridges were so expensive. When they discovered that they could purchase
Some attractive features of producing electricity from wind power are that the wind is clean and free. It does not have to be produced first as a fuel, then transported, and stored until it is
Perfect competition is more likely to thrive in an environment in which buyers and sellers have more nearly complete and equal access to information. Historically, a factor hindering the development
The world output of transistors, the main components of microprocessors, has exploded from a little more than 1 billion in the late 1960s to more than 1 quintillion today. During this same period,
If information is not the same for buyers and sellers, markets may be dominated by low-quality products. This type of market failure is due to asymmetric information. It is called the lemons problem
If used car dealers depend on repeat customers, is the lemons problem reduced or eliminated?
Suppose the propane-distribution industry currently fits all the characteristics of perfect competition. If the government were to decide to limit the number of propane distributors to a handful of
Rare earths are a series of chemical elements found in the Earth’s crust that are vital to many modern technologies, including consumer electronics, computers and networks, communications, clean
There are numerous manufacturers of similar printers, fax machines, and copiers, so the markets for these businesses are far from monopolistic. Nevertheless, manufacturers are careful to design each
JSTOR (Journal Storage) is a nonprofit organization that sells subscriptions for Internet access to back issues of scholarly journals in fields such as chemistry, literature, business, and economics.
It used to be said that technology could cause barriers to entry. Relatively major investments had to be made in sophisticated and relatively expensive computer systems to enter certain markets. Only
Many observers of today’s high-stakes, high-technology world argue that the world’s largest manufacturer of microprocessors, Intel, is a monopoly. They point out that to compete effectively with
Out-of-pocket tuition rates for any two college students can differ by considerable amounts even if the students happen to major in the same subjects and enroll in many of the same courses. This is
In the past, television commercials promoting toothpaste featured a well-known chef expressing satisfaction with the latest in toothpaste flavors, including citrus, herbal, mint, and cinnamon. U.S.
Kola Real, a soft drink manufactured by a Peru-based firm called Industrias Ananos, was invented in the late 1980s by a couple who saw an opportunity to enter Peru’s cola market when terrorists
Not only can the internet be used as an information-gathering tool, but it can also be an effective way for firms to advertise their products. In 2001, advertising of all types decreased, but online
In the last few years, streaming services have become as much, if not more, popular than cable TV. This popularity has induced companies such as Amazon and Netflix to enter into new markets, like
Automated Clearing Houses (ACHs) process both private payments, such as automatic deposits to wage-earners bank accounts, and public payments, such as direct deposits of Social Security stipends. The
Since the terrorist attacks on September 11, 2001, the airline industry has suffered a number of setbacks. Initially, the new security regulations and resulting long waits in airports along with a
What likely happened to the four-firm concentration ratio in the airline industry when United and Continental Airlines merged? What likely happened to the eight-firm concentration ratio?
It is a Sunday in late November, which means that college football teams will be pitted against their most hated rivals. Auburn fans will attend tailgate parties wearing t-shirts depicting the Auburn
In 2008, the German-owned DHL Express decided that it could no longer compete with FedEx and UPS in the U.S. domestic package delivery market. The company had lost more than $1 billion a year in 2006
In 1990, the four-firm concentration ratio in the U.S. textbook industry was about 40 percent. The top four firms had an average of about 10 percent of the textbook market. The other 60 percent of
In recent years, Netflix and Amazon have gained a significant market share in streaming services. Why do you think these firms have experienced positive network feedback?
With the success of many online-dating platform firms, more and more firms have entered the industry. To attempt to gain a competitive advantage, some online-dating firms have begun to limit the
During the 1990s, the Food and Drug Administration (FDA) launched preliminary efforts to convince Congress to grant the FDA the authority to regulate the manufacture and sale of cigarettes. FDA
The technical term for Internet telephony is “Voice Over Internet Protocol” or “VOIP” in which sounds are transformed into digital packets of information and transported across the Internet
In the market for personal computer (PC) software, Microsoft is the dominant firm with a 90 percent market share in the market for operating software. Microsoft’s market share in the office
An industry that has been heavily regulated for many years is the dairy industry. The 1937 Agricultural Adjustment Act (AAA) provided for federal control over the marketing of fluid milk (as opposed
During the weeks and months following the widespread power blackout affecting millions of people in the Northeast on August 14, 2003, regulators began to rethink their methods of regulating
Political leaders and media commentators often express concern that since 1995, U.S. manufacturing employment has fallen by nearly 12 percent. Their comments often imply that other countries must be
Since 2006, illegal immigration has become a major political issue between the Republicans and Democrats. An estimated 12 million illegal aliens are working in the United States. A large percentage
Suppose the government passes an immigration reform law that is successful in preventing most illegal immigrants from getting employment in the United States. Which American groups would benefit and
Economist David Hamermesh of the University of Texas, Austin, and Jeff Biddle of Michigan State University discovered that “plain-looking” people earn 5 to 10 percent less than people of
At least once a year some super athlete lands a multimillion-dollar contract, and the press is all agog over the seemingly astronomical salary. You will hear sports writers and other persons
One way to compare the real purchasing power of market wages in different countries is to determine how long it takes to be able to buy an item that is available in most places in the world. One such
The Davis-Bacon Act was passed in 1932. It specifies that the Secretary of Labor can establish minimum “prevailing wages” that contractors must pay workers when engaging in any construction that
The classic example of monopsony is the “company town” – a small community in which a single firm is the dominant employer. In extreme examples, companies have owned and managed all housing,
Each year the World Bank issues a report that provides the per capita incomes of about 150 nations. Out of all these countries, only 26 percent have per capita incomes higher than the poverty
In 2006, Massachusetts enacted a law requiring all Massachusetts residents to have health insurance. At the time the law was passed, there were about 500,000 uninsured residents who would be required
In an essay in Time magazine, Fareed Zararia identified three classes of jobs. There are relatively unskilled jobs, jobs that require skilled or relatively well-educated labor that involve performing
Since the end of the 1970s, the average income of the top fifth of male income earners has risen by about 4 percent. During the same period, the average earnings of men in the bottom fifth fell by 44
At the end of the 1960s, total wages and salaries accounted for close to 60 percent of the income received from all sources in the United States. Since then, the share of total national income has
In the financial crisis of 2008, the stock market lost more than $7 trillion in value, and large numbers of very highly paid workers in the financial services industry lost their jobs. Corporate
There is considerable income mobility in the United States. Between 50 and 80 percent of the lowest 20 percent of income earners are still part of that category 10 years later. Within 20 years, 95
In the United States, government programs and some private programs engage in nonprice rationing. Nonetheless, the primary rationing device for health care services continues to be the market
There has been a controversy in Michigan concerning the manure generated by the state’s dairy farms. The milk cattle produce large amounts of manure, which is liquefied and spread on farmland as
Fish farming, or the growing of edible fish in small freshwater ponds and sea inlets blocked with earthen dams, began in China thousands of years ago. Twenty years ago, Chinese fish farmers were
For years, farmers have sold corn and corn by-products for use in the production of a fuel called ethanol, which is an alternative to gasoline in powering cars and trucks. The firms that produce
In 1997, in Kyoto, Japan, the Dutch government joined 130 other nations in signing a treaty called the Kyoto Protocol, committing the nations to reducing their emissions of methane and other
From the point of view of preventing or reducing global warming, does it matter where on the planet the reduction in global-warming gases takes place?
Of the nearly 1,300 species officially classified as endangered under the 1973 Endangered Species Act, between 450 and 500 are usually considered to be stable or improving. The remaining species are
Under the European Union’s Common Fisheries Policy, countries are allocated quotas for the amounts of fish that their fishermen can catch in various areas of the sea. In most European nations,
American Electric Power (AEP) owns power plants around the United States that together release about 3 percent of U.S. carbon dioxide (CO2) emissions every year. The company has entered into a
In Virginia’s Shenandoah Valley, 230 miles south of Washington, D.C., stands a 215-foot tall rock arch called Natural Bridge. A tributary of the James River flows beneath. A 347-foot cavern lies
Most South American nations produce about half of their electricity by burning natural gas to generate electric power. Natural gas is easier to find, extract, and put to use in Brazil than in
A major problem for negotiations by members of the World Trade Organization to expand free trade has been the issue of agricultural subsidies. U.S. government agricultural subsidies to cotton farmers
Democrats and Republicans have been divided in recent years on the issue of free trade. Republicans generally view free trade as promoting economic growth. Republicans largely hold the economics
All of the debates about improving our export sector to increase jobs and U.S. competitiveness ignore the benefits of imports. David Wessel of The Wall Street Journal illustrated this point with an
Between 2002 and 2005, French wine exports to the United States dropped by nearly 18 percent. Some wine experts blamed part of the decline on what they perceived to be a drop in the quality of French
Although a nation’s balance of payments bears similarities to the accounting system of a company, deficit or surplus measures in the balance of payments are much different from a corporation’s
The global demand for gold and platinum, which are key South African exports, has been on a generally upward trend from 2001 to 2012. By 2012, gold sold for more than $1,500 per ounce. As people
According to the Bank for International Settlements in its Triennial Central Bank Survey, the average daily volume of trading in the global foreign exchange market in 2014 exceeded $5 trillion. The
If the dollar’s use as a vehicle currency were to decrease, what would likely happen to the value of the dollar in foreign exchange markets other things being equal?
The U.S. current account balance has been in deficit continuously since the early 1980s. This is not something new. During the 1880s, the United States had many years of current account deficits.
In the past several decades, the United States has consistently run a current account deficit. The dollar has become weaker. We have had recessions, and we have had inflation. Some economists and
If Walmart were treated as a separate country, it would act as the fifth largest importer of products manufactured in China, placing it ahead of Russia and the United Kingdom. The company accounts
Identify which of the following would generate an increase in the market demand for tablet devices, which are a normal good. a. A decrease in the incomes of consumers of tablet devicesb. An increase
If the demand for Medication B in panel (b) of Figure 4-6 were to rise significantly to push the market clearing price above a government price ceiling, what events would occur in the market for
Suppose that panel (a) of Figure 5-1 applies to Pennsylvania’s steel market. Suppose that steel manufacturers in this state adopt a new, equal-cost technique for producing steel that entails a
Could negative externalities be addressed if pork producers negotiated payments for the right to pollute air shared with properties owned by residential neighbors? Explain your reasoning.
Over 2 billion people use Facebook. Consequently, Facebook has access to enormous amounts of Internet usage data. Facebook allowed access to such data as Microsoft, Spotify, and Netflix. If you are a
Why do you suppose that light rail service cutbacks take place when governments reduce their sponsorship funding even if an affected operating authority responds by charging riders slightly higher
Why might imposing the same taxes on traditional cigarettes and e-cigarettes fail to generate the same changes in quantity demanded?
Why might privately financed spaceflight add less each year to the clutter of abandoned materials in orbit as compared with past annual jettisons of materials by NASA and agencies funded by European
Why do you suppose that proposals have surfaced for the U.S. Transportation Department to allow airlines to charge special fees to passengers who wish to board planes accompanied by service pets?
Airline companies are increasingly changing their rules about which animals they will accept as “service animals.” If by chance you require a service animal to enjoy less stressful airline
In what way does the state of Wisconsin, by providing the lands occupied by state parks, make implicit grants even though the government transmits few payments explicitly?
The sales tax rate applied to all purchases within a state was 0.04 (4 percent) throughout 2019 but increased to 0.05 (5 percent) during all of 2020. The state government collected all taxes due, but
Between 2020 and 2021, a small business owner’s income increased from $200,000 to $220,000. The annual state income taxes that she paid increased from $5,000 to $5,500. What was her average state
In problem 6-10, what was the individual’s marginal state income tax rate in 2021? Did this individual experience proportional, progressive, or regressive taxation? Explain briefly.Data From
Between 2020 and 2021, the income received by a company located in a city rose from $5,000,000 to $6,000,000. The annual city income taxes that the company paid increased from $250,000 to $500,000.
In Problem 6-12, what was the company’s marginal city income tax rate in 2021? Did this company experience proportional, progressive, or regressive taxation? Explain briefly.Data From Problem
Who ultimately pays the debt repayment expenses owed by state and local governments?
Why do you suppose that the U.S. government’s AI-directed efforts to boost the tax bills of firms earning incomes abroad have induced some firms to relocate to other countries?
If you have a chance in the future to invest in a risky, but potentially profitable venture, what is most important to you – your average tax rate or your marginal tax rate? Why?
Did California’s Franchise Tax Board rely on static or dynamic analysis? Explain briefly.
Different states and different cities have different state income tax rates and different sales tax rates. How can you use this readily available information to help you decide whether to take a new
What happened to the tax base comprising the incomes of the richest Connecticut residents subject to higher tax rates? Explain briefly.
Assume that you have become a high-income-earning individual and that you are living in a state with an income tax. Detail the ways that you could react to an increase in that state’s highest
Why do you suppose that the baby-boom-generation population bulge has caused the Social Security budget constraint to fall out of balance?

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