Questions and Answers of Economics Today The Micro View

When the price of shirts emblazoned with a college logo is $20, consumers buy 150 per week. When the price declines to $19, consumers purchase 200 per week. Based on this information, calculate the
Imagine you were someone contemplating higher education. How could you react to increases in the tuition prices of private colleges?
If the demand is relatively elastic for a particular retail item and all firms respond to AI guidance with an aim to boost their revenues and profits, should each one increase or decrease its
Why do you suppose that developers have designed apps that allow people to give themselves incentives to exercise by providing payments for supplying gym workouts but that impose penalties for
Why might the fact that the demand for soft drinks is elastic help to explain why Philadelphia’s revenues from the sugary drinks tax have turned out to be about 15 percent lower than predicted by
Assume that you are living in Philadelphia and like sugary drinks. You continue to buy almost the same quantity of such drinks. Does that mean that the law of demand is wrong?
Suppose that economists were to divide consumers into two groups based on how quickly they had to decide about purchase of an airline ticket versus other modes of travel. Which group likely would
If there was a significant increase in airline ticket taxes, how do you determine whether alternative modes of transportation might be acceptable to you?
At a consumer optimum involving goods A and B, the marginal utility of good A is 2 utils, and the marginal utility of good B is 8 utils. How much greater or smaller is the price of good B compared
At a consumer optimum involving goods X and Y, the price of good X is $3 per unit, and the price of good Y is $9 per unit. How much greater or smaller is the marginal utility of good Y than the
Assume that you are a person concerned about being overweight or becoming overweight. How might you change your method of shopping for food to improve the probability that you don’t “overeat”?
How might the advent of machine-learning shopping apps undermine an oft-repeated media claim that consumers can be harmed by having to confront “too many choices”?
When you observe others’ behavior, you see that some people purchase what appears to be outrageously expensive plain cotton T-shirts as well as similarly high-priced designer goods. You may observe
Under what specific consumer-optimum circumstances would a regular customer of Momotaro jeans have been willing to pay $90,000 for a sports car on the same day that she bought her latest pair of
Suppose that you end up with a very high annual income. Suppose further that there are several lines of designer shoes that you like. In spite of your high income, will you still shop “for the best
How might some individuals’ marginal utility per dollar spent be reduced by the inclusion of wireless systems that report data on driving speeds and vehicle movements accessible by insurers or
Learning how to use the numerous digital systems for a particular brand of automobile does take time. Once learned, however, most consumers can retain their proficiency in using such digital systems.
An individual leaves a college faculty, where she was earning $80,000 a year, to begin a new venture. She invests her savings of $20,000, which were earning 10 percent annually. She then spends
Why do you think that since states began using lower interest rates to calculate discounted present values of future promised payments, the total extent of underfunding of states’ pension systems
When you contemplate the purchase of bonds with your savings, how do the rate of inflation and your marginal income tax rate enter into your decision making?
What might the design of trading algorithms that speed the execution of stock trades contribute to stock market efficiency?
Assume that you read in the financial news section of an online news blog that Friends of the Planet has singled out TrashMaker Corporation for the latter’s environmentally inappropriate
How might winning a bid to sell a financial asset a few microseconds faster than another firm enable a trader at a financial firm to earn a profit perhaps just a few minutes after buying the asset?
Given what you just learned in this feature above, should you place your savings with the financial trading firms mentioned? Why or why not?
Based on the efficient markets theory, might you conclude that a manager of funds has done “as well as could be expected” by earning a return on a portfolio of stocks that matches the performance
If you believe the efficient market hypothesis, how should you allocate your savings?
For the firm discussed in Problem 22-4, the total cost of producing 249 units was $12,425. What was the marginal cost incurred by the firm in producing the final tablet device that month?
Was CSX’s railway output consistent with the quantity specified by its production function when the company used preblocking and flat switching?
Are the hourly wages that an airline pays to its maintenance workers fixed costs or variable costs?
How do cost-reducing applications of virtual-reality technologies affect the position of a firm’s average total cost curve?
Is CATL’s long-run average cost of producing EV batteries currently higher or lower than it will be in future years following implementation of China’s government’s planned policies? Explain
Why do you think that some trucking firms have determined that including last-mile deliveries within their least-cost scale of operations would require providing very large volumes of delivery
Does Maersk’s use of sailing cylinders reduce its total fixed costs or its total variable costs? Explain.
Suppose that you and some friends have started a long-distance trucking business. You are considering adding wind-resistance-reducing equipment to your trucks. How will you decide whether to go ahead
Why is it likely every bit as important, from a cost standpoint, for clothiers to know when upcoming orders for items should be raised or lowered considerably as it is to smooth out inventories over
Perhaps you have read that AI-guided and robot-implemented systems will permanently reduce the need for human beings in the workforce. Should you be worried?
You might be surveyed someday on whether you know the price per gallon of gasoline that you purchased for your car. You might be one of those individuals who cannot remember that price. Does that
Why do you suppose that as market clearing prices of traditional passenger cruises have continued to increase, owners of cargo ships have considered permanently reallocating more ship space to
If a future technological change were to cause the price of food delivery services to drop below its existing level following entry of new firms even as market demand continued to increase, what type
Why do you suppose that some enterprising urban farmers are growing their crops on tops of buildings?
Assume that you have access to funds that would allow you to enter the vegetable-growing business. You have the choice of purchasing the rights to grow your vegetables in an urban setting or a rural
If an increase in the minimum wage rate induces a number of restaurants to leave the industry, what is the effect on the equilibrium price of a restaurant meal? Explain briefly.
Are the profits of Chicago’s restaurants higher or lower than they otherwise would be if Chicago were to permit many more food trucks to operate within the city?
Why is the “dynamic” – meaning “in motion over time” – naure of demand a fundamental aspect of any monopoly’s problem in searching for the price that maximizes its profit during a given
If you regularly purchase items online via Amazon, how can you chck to see if the company is engaged in personalized price discrimination?
What was the five-firm concentration ratio in the global tire industry?
What would be the revised HHI value if the top 10 firms decided to conduct a horizontal merger and offer a single “Top 10” product?
How might the results of Gill and Prowse’s study support claims commonly made by company managers who are widely recognized as successful businesspeople that they have succeeded by making rapid
How might the use of AI techniques to better attune platforms’ services to end users’ preferences enhance the emerging “big data network effect”?
Why do you suppose that the largest cosmetics companies have engaged in bidding wars to acquire smartphone apps that can be used to match cosmetics to skin tones or to provide guidance for applying
Let’s say that you have just been named the head manager of a small cosmetics firm. How will network effects influence the way you manage this firm?
Why do you think that OpenTable, a restaurant-reservation platform, almost failed when it initially sought many nationwide fine-dining restaurants but then recovered when it better linked customers
Suppose that you want to create a news-feed app. In deciding what types of stories to put on this news app, how would you proceed?
For an industry that actually was a natural monopoly, would imposing a regulation requiring price to equal average cost necessarily prevent both price and average cost from rising if demand were to
Why do you suppose that the field of “robot psychology” is an example of one in which firms’ increased utilization of capital-based resources is creating a new category of jobs for human beings?
When Congress passed legislation limiting the sale of incandescent light bulbs, how would you have reacted?
Why must private costs incurred to satisfy a government regulation ultimately fall on firms and individuals of the goods and services subjected to the regulation?
Does the failure of antitrust authorities to include illegal but economically relevant competitors when computing an industry HHI for merger analysis yield an HHI value that is biased upward or
In light of the fact that artificially sweetened toppings are lower-priced substitutes for natural maple syrup, why might the Folinos have been justified in their concerns that the FDA’s
The FDA regulates the labeling of gluten-free foods as well as non-genetically modified organisms (GMOs) in other foods. Do you still have to be careful about the labeling of such foods?
How can the FDA’s legal power to authorize firms to produce specific drugs enable the FDA to create monopoly producers of such pharmaceuticals?
The second table depicts the product market and labor market a digital device manufacturer faces.a. Calculate the firm’s marginal product, total revenue, and marginal revenue product at each input
Assume that you are a regular purchaser of a medication that has been on the market for decades, but has now been “re-approved.” The price of that medication has risen dramatically. Will you and
In the short run, a manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the third table:Derive the firm’s
A monopoly firm hires workers in a perfectly competitive labor market in which the market wage rate is $30 per day. If the firm maximizes profit, and if the marginal revenue from the last unit of
The current market wage rate is $30, the rental rate of land is $1,000 per unit, and the rental rate of capital is $500. A firm’s managers find that under their current allocation of factors of
The current wage rate is $30, and the price per service unit of capital is $500. A firm’s marginal product of labor is 600, and its marginal product of capital is 20,000. Is the firm maximizing
How might an increase in demand for tourist destinations along with a higher demand for solar and wind energy have induced conversion of some German mines into lakes surrounded by cottages, solar
Why might an employer choose not to hire some job candidates offering relatively high levels of marginal product if the price of the product the employer sells decreases considerably?
How legitimate would concerns be about the possibility of monopsonistic exploitation of labor via platform firms’ application of data analytics if providers of labor services can choose among a
Why do you suppose that some unions in Michigan and Wisconsin have reduced their membership dues since the passage of right-to-work laws in those states?
Will a tennis club that chooses for the first time to utilize In/Out devices on its courts tend to adjust the number of line judges that it employs within its cost-minimizing combination of resources
Assume that you are a tennis player who frequently participates in tournaments. Would you rather have your tennis club use the In/Out device, a much more expensive “monitoring system,” or human
Why might we expect that the availability of any lower-priced and higher-quality item that an individual consumes during leisure time is likely to reduce that person’s willingness to supply labor
Assume that you are a young male in the 21- to 30-year-old age bracket. Further suppose that you do indeed devote large chunks of your time playing, say, Fortnite; Battle Royale. You obviously derive
What is the effect of Florida’s licensing requirement on the quantity of dietary advice services provided by sellers located in that state?
Onerous licensing statutes for the provision of different services exist in many states, and these statutes are increasing in number and complexity. How could you protect yourself from a situation
How do you suppose that the substantial increase in profits by traditional taxicab firms between 2009 and 2013 affected the incentive for non-taxi drivers to offer services through ride-sharing firms
Because of competition from Uber, Lyft, and other ride-sharing services, the cost of obtaining a “medallion” to offer legal taxi services has fallen just about everywhere in the United States.
How might offering cocktails and other drinks, unique food items, alternative viewing options, or more comfortable seats assist a movie theater in distinguishing its service product from those of
Why do you suppose that Norwegian physicians in the private sector have adapted individually unique ways of utilizing phone apps that patients use to obtain information about health care
Why might consumers be willing to pay a higher price for a particular firm’s product that is “different” from a close substitute sold by a competing company?
Are themed cruises likely to be more or less substitutable as compared with traditional oceanic cruises?
Assume that someday you become the manager of a local restaurant. Would you ever consider “borrowing” the product differentiation techniques of cruise ships for your restaurant?
Why might firms perceive that the interactive capabilities of digital advertising could offer more opportunities for immediate boosts to revenues and profits than other forms of advertising?
You are now in charge of digital advertising for an online dating platform. Would you be better off advertising the vast scope of your platform, or assuming it’s true, the narrow focus of your
What is the approximate value of the industry’s Herfindahl-Hirschman Index in Problem 26-2?Problem 26-2The second table shows recent worldwide market shares of producers of inkjet printers.
Consider the following list, and classify each item according to the appropriate type of two-sided market – audience-making, matchmaking, shared-input, or transaction-based – and write a
Calculate the slope of the function you graphed in Problem A-5. -12-8 20- 16+ 12+ 8+ -12 -16 -20 8 12 x
Calculate the slope of the function you graphed in Problem A-6. 20 16 12 x
Suppose that the U.S. federal government has borrowed $500 billion to expand its total spending on goods and services across the entire economy in an effort to boost by $500 billion the aggregate
Why do you suppose that economists sometimes disagree about whether to classify as a microeconomic or macroeconomic endeavor the application of big data analytics to massive volumes of information
Sometimes adults tell young people to “get all the education you can get.” Does this mean that you should necessarily obtain an advanced degree?
How might the fact that the U.S. government allows larger tax deductions for some charitable donations than for others affect U.S. taxpayers’ incentives about how much to donate and to whom they
Overall, does it appear that the affordable-housing loans offered by Freddie Mac arise from the application of centralized command and control, the price system, or a mix of the two? Explain your
Assume that you and two friends decide to buy an apartment building next to a college. Renters are primarily full-time students. Should you take advantage of the low-interest rate loan? What
Why do you think that the prevalence of marriages by women to higher-income-earning men has remained relatively steady in recent years?
Currently, a larger percentage of women are obtaining advanced degrees than are men. What are some of the real-world implications of this trend with respect to marriage?
Why might a high-income individual perceive a substantial opportunity cost of devoting an available labor hour to a low-income task?
Why do you suppose that some airlines have simply removed a restroom or two from each of their passenger planes?

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