Principles Of Economics 2nd Edition Steven A. Greenlaw: University Of Mary Washington, David Shapiro: Pennsylvania State University - Solutions

How can a small special interest group win in a situation of majority voting when the benefits it seeks flow only to a small group?
How does rational ignorance discourage voting?
Suppose an election is being held for Soft Drink Commissioner. The field consists of one candidate from the Pepsi party and four from the Coca-Cola party. This would seem to indicate a strong preference for Coca-Cola among the voting population, but the Pepsi candidate ends up winning in a
Anastasia, Emma, and Greta are deciding what to do on a weekend getaway. They each suggest a first, second, and third choice and then vote on the options. Their first choice, second choice, and third choice preferences are as shown in Table 18.2. Explain why they will have a hard time reaching a
True or false: Majority rule can fail to produce a single preferred outcome when there are more than two choices.
Why might legislators vote to impose a tariff on Egyptian cotton, when consumers in their districts would benefit from its availability?
What is the main factor preventing a large community from influencing policy in the same way as a special interest group?
What is the cost of voting in an election?
Based on the theory of rational ignorance, what should we expect to happen to voter turnout as the Internet makes information easier to obtain?
Many retirement funds charge an administrative fee each year equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest $5,000 in the same stock this year. Alexx invests directly and earns 5% a year. Spenser uses a retirement fund and earns 4.75%.After 30 years, how much more will
How much money do you have to put into a bank account that pays 10% interest compounded annually to have $10,000 in ten years?
Suppose Ford Motor Company issues a five year bond with a face value of $5,000 that pays an annual coupon payment of $150.a. What is the interest rate Ford is paying on the borrowed funds?b. Suppose the market interest rate rises from 3% to 4% a year after Ford issues the bonds. Will the value of
Imagine that a $10,000 ten-year bond was issued at an interest rate of 6%. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9%.a. Given the change in interest rates, would you expect to pay more or less than $10,000 for the bond?b.
The Darkroom Windowshade Company has 100,000 shares of stock outstanding. The investors in the firm own the following numbers of shares: investor 1 has 20,000 shares; investor 2 has 18,000 shares; investor 3 has 15,000 shares; investor 4 has 10,000 shares;investor 5 has 7,000 shares; and investors
How do bank failures cause the economy to go into recession?
You and your friend have opened an account on E-Trade and have each decided to select five similar companies in which to invest. You are diligent in monitoring your selections, tracking prices, current events, and actions taken by the company. Your friend chooses his companies randomly, pays no
Explain what happens in an economy when the financial markets limit access to capital. How does this affect economic growth and employment?
Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.
What are some reasons why the investment strategy of a 30-year-old might differ from the investment strategy of a 65-year-old?
Explain how a company can fail when the safeguards that should be in place fail.
If you owned a small firm that had become somewhat established, but you needed a surge of financial capital to carry out a major expansion, would you prefer to raise the funds through borrowing or by issuing stock? Explain your choice.
Is investing in housing always a very safe investment?
What are the two key choices U.S. citizens need to make that determines their relative wealth?
Why is it hard to forecast future movements in stock prices?
How is buying a house to live in a type of financial investment?
What is an index fund?
What is a mutual fund?
Why should a financial investor care about diversification?
Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?
Name several different kinds of bank account. How are they different?
Why are banks called “financial intermediaries”?
How do the shareholders who own a company choose the actual managers of the company?
What is the difference between a private company and a public company?
What is a capital gain?
What is a dividend?
When do firms receive money from the sale of stock in their firm and when do they not receive money?
What does a share of stock represent?
What is a bond?
Why are banks more willing to lend to wellestablished firms?
Why can firms not just use their own profits for financial capital, with no need for outside investors?
What are the most common ways for start-up firms to raise financial capital?
You open a 5-year CD for $1,000 that pays 2% interest, compounded annually. What is the value of that CD at the end of the 5 years?
If your receive $500 in simple interest on a loan that you made for $10,000 for 5 years, what was the interest rate you charged?
What is the total amount of interest collected from a $5,000 loan after three years with a simple interest rate of 6%?
Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?
Which has a higher average return over time: stocks, bonds, or a savings account? Explain your answer.
Calculate the equity each of these people has in his or her home:a. Fred just bought a house for $200,000 by putting 10% as a down payment and borrowing the rest from the bank.b. Freda bought a house for $150,000 in cash, but if she were to sell it now, it would sell for $250,000.c. Frank bought a
From a firm’s point of view, how is a bond similar to a bank loan? How are they different?
Answer these three questions about early-stage corporate finance:a. Why do very small companies tend to raise money from private investors instead of through an IPO?b. Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds?c. Who has better information about
Imagine that 50-year-old men can be divided into two groups: those who have a family history of cancer and those who do not. For the purposes of this example, say that 20% of a group of 1,000 men have a family history of cancer, and these men have one chance in 50 of dying in the next year, while
Using Exercise 16.20, sketch the effects in parts(a) and (b) on a single supply and demand diagram.What prediction would you make about how the improved information alters the equilibrium quantity and price?
To what sorts of customers would an insurance company offer a policy with a high copay? What about a high premium with a lower copay?
How do you think the problem of moral hazard might have affected the safety of sports such as football and boxing when safety regulations started requiring that players wear more padding?
A website offers a place for people to buy and sell emeralds, but information about emeralds can be quite imperfect. The website then enacts a rule that all sellers in the market must pay for two independent examinations of their emerald, which are available to the customer for inspection.a. How
You are on the board of directors of a private high school, which is hiring new tenth-grade science teachers. As you think about hiring someone for a job, what are some mechanisms you might use to overcome the problem of imperfect information?
What are some of the metrics used to measure health outcomes?
How might adverse selection make it difficult for an insurance market to operate?
What is the key difference between a fee-forservice healthcare system and a system based on health maintenance organizations?
How can deductibles, copayments, and coinsurance reduce moral hazard?
Define deductibles, copayments, and coinsurance.
How can moral hazard lead to insurance being more costly than was expected?
What is the problem of moral hazard?
What is an actuarially fair insurance policy?
In an insurance system, would you expect each person to receive in benefits pretty much what they pay in premiums? Or is it just that the average benefits paid will equal the average premiums paid?
What is an insurance premium?
What are some of the ways that someone looking for a loan might reassure a bank that is faced with imperfect information about whether the loan will be repaid?
What are some of the ways a seller of labor (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information?
What are some of the ways a seller of goods might reassure a possible buyer who is faced with imperfect information?
What do economists (and used-car dealers) mean by a “lemon”?
Why might it be difficult for a buyer and seller to agree on a price when imperfect information exists?
Why is it difficult to measure health outcomes?
Why is there asymmetric information in the labor market? What signals can an employer look for that might indicate the traits they are seeking in a new employee?
For each of the following purchases, say whether you would expect the degree of imperfect information to be relatively high or relatively low:a. Buying apples at a roadside standb. Buying dinner at the neighborhood restaurant around the cornerc. Buying a used laptop computer at a garage saled.
If all countries eliminated all barriers to immigration, would global economic growth increase?Why or why not?
If the United States allows a greater quantity of highly skilled workers, what will be the impact on the average wages of highly skilled employees?
If a company has discriminated against minorities in the past, should it be required to give priority to minority applicants today? Why or why not?
If it is not profitable to discriminate, why does discrimination persist?
Will union membership continue to decline? Why or why not?
Are unions and technological improvements complementary? Why or why not?
What factors can explain the relatively small effect of low-skilled immigration on the wages of low-skilled workers?
How would you expect immigration by primarily low-skill workers to affect American low-skilled workers?
Have levels of immigration to the United States been relatively high or low in recent years? Explain.
Describe how affirmative action is applied in the labor market.
What policies, when used together with antidiscrimination laws, might help to reduce the earnings gap between men and women or between white and black workers?
Will a free market tend to encourage or discourage discrimination? Explain briefly.
Does a gap between the average earnings of men and women, or between whites and blacks, prove that employers are discriminating in the labor market?Explain briefly.
Describe how the earnings gap between blacks and whites has evolved in recent decades.
Describe how the earnings gap between men and women has evolved in recent decades.
What are the main causes for the recent trends in union membership rates in the United States? Why are union rates lower in the United States than in many other developed countries?
Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired by those employers? Explain briefly.
What is the long-term trend in American union membership?
How does the presence of a labor union change negotiations between employers and workers?
What are some of the most important laws that protect employee rights?
Why do employers have a natural advantage in bargaining with employees?
What is a labor union?
If immigration is reduced, what is the impact on the wage for low-skilled labor? Explain.
Does the earnings gap between the average wages of females and the average wages of males prove labor market discrimination? Why or why not?
Explain in each of the following situations how market forces might give a business an incentive to act in a less discriminatory fashion.a. A local flower delivery business run by a bigoted white owner notices that many of its local customers are black.b. An assembly line has traditionally only
Do countries with a higher percentage of unionized workers usually have less growth in productivity because of strikes and other disruptions caused by the unions? Why or why not?
Are firms with a high percentage of union employees more likely to go bankrupt because of the higher wages that they pay? Why or why not?

Showing 900 - 1000 of 1475

Principles Of Economics 2nd Edition Steven A. Greenlaw: University Of Mary Washington, David Shapiro: Pennsylvania State University - Solutions

Step by Step Answers