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

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Mr. X is a retailer of snow blowers. Mr. Y signs a contract to buy a snow blower from Mr. X but then decides he does not want it. The snow blower that Mr. Y agreed to buy is subsequently sold to Mr. Z for $225. The average variable cost of a snow blower to Mr. X is $180. The marginal cost to Mr. X
X Co. is a retail dealer of garden tractors. Mr. Y signs a contract to buy a garden tractor for $400 but later backs out of the agreement. The tractor that Mr. Y agreed to buy is subsequently sold to Mr. Z for $380. The average cost of a garden tractor to X Co. is$260, and the average variable cost
Mrs. Wilson enters into a contract to buy an automobile for $20,000 from Z Co., a dealer. Mrs. Wilson subsequently backs out of the contract. Z Co. then sells the vehicle to Mr. Thompson for $19,000. Z Co. sues Mrs. Wilson for breach of contract. During the trial, an accountant reports that the
A. Nimzovitch, a top-ranked chess player, hired a taxicab to pick him up at his hotel and take him to a chess match, the winner of which was to receive $1 million. Before the match Nimzovitch was favored to win easily. Unfortunately the taxi broke down, making Nimzovitch late for the match, which
Mr. D is a professional basketball player who orders some shoes through the mail. The mail order house promises all customers delivery within thirty days of receiving the order. Mr. D’s shoes do not get delivered to him on time; as a result he has to wear ill fitting, uncomfortable shoes in the
Mr. M enters into a contract with Mr. R, under which Mr. R agrees to build a model railroad for $200. The value of the model railroad to Mr. M is $300. Expecting that the model railroad will be delivered, Mr. M spends $40 remodeling his basement to make room for it. Before Mr. R has received any
Mr. X enters into a contract with Mr. Z under which Mr. Z agrees to build a customized telescope for X for $500. The value of the completed telescope to X will be $600.Expecting that the telescope will be delivered on schedule, X pays the purchase price to Z, and drills a hole in his roof at a cost
Customers who repeatedly buy on credit often sign agreements which contain an “addon” clause. Under this type of clause, all goods previously purchased by the customer from the seller are “security” for the price of the goods which were purchased last. What is the purpose of this kind of
Some courts have held that the “holder in due course” doctrine is unconscionable. Could this doctrine be efficient? What are the likely consequences to consumers if the courts succeed in abolishing it?
The Miami Seaquarium enters into a contract with Mr. Q whereby Mr. Q promises to deliver two healthy full-grown California gray whales to the Seaquarium by January 1, 1992. Shortly after the contract is entered into, an epidemic among whales causes California gray whales to become extinct. Is Mr. Q
The case of Laidlaw v. Organ involved the question of whether a contract for the purchase of tobacco was valid when the buyer had failed to inform the seller about an event which affected the value of the tobacco (the treaty ending the War of 1812).Discuss the economic significance of this case.
In some restaurants the waiters and waitresses keep all of the tips from their own tables, while in others all the tips are combined and everyone gets an equal share. What are the advantages and disadvantages of each system? Which system do you think is more likely to be used in a very large
The Shakers were a communal religious group that held property in common, distributed goods to their members in equal shares, and practiced celibacy. Explain why the numbers of the Shakers declined during the period from 1850 to the present.
What are the two leading rules concerning the ownership of harvested whales that were followed in the whaling industry during the period from 1750 to 1870? How well suited was each rule to the hunting of (a) sperm whales, or (b) right whales? Consider also the two main alternative methods used to
Suppose the demand curve for transplantable human kidneys is PD = 20 − ½ Q, Where Q is the annual amount of kidneys in thousands, and PD is the price of a kidney, and the equation for the supply of kidneys is PS = − 6 + ½ Q. What is the amount of the shortage of kidneys if there is no legal
Compare the catch share system, whereby certain fishermen have the right to fish a specified share of the annual catch of some type of fish, to an alternative method that has been used to reduce the fishing harvest, limiting fishing to a few days of the year. Which system has less social cost?
People who are opposed to allowing a market for organs often argue that, if there were such a market, “the rich would get all the organs.” How could those who support the proposed market for organs answer this argument?
What factors have brought about the recent increase in the “shortage” or excess demand for transplantable human organs? What methods are used to compete for organs under the current law?
What would be the consequences of allowing a mother to sell an unwanted baby at birth under regulation that would ensure that babies were not purchased for illegal purposes?Compare this scenario to the situation under current law.
Draw a diagram showing the supply and demand of babies for adoption in the United States. Explain why the supply curve has shifted to the left since 1950 (think of all the possible reasons for this shift), and why there is a shortage of babies. How is it decided which couples get the babies that
Under the usual contract, the publisher of a book pays all costs of production, and the author receives a percentage of total sales revenues. Would you expect the author to have an opinion different from the publisher on the question of what the price of the book should be? Explain why in detail.
Under the law of waste, a life tenant was not allowed to cut timber before it had achieved mature growth. What is the efficient, value-maximizing rule one should follow in deciding when to cut timber, or when to butcher a hog? Explain why there was a potential conflict between a life tenant and a
What is the justification for statutes providing that a widow is entitled to a forced share upon the death of her spouse? Why have these statutes been criticized?
Most crawfish in Louisiana are on public lands, which are open to anyone who wants to catch crawfish. Show, with a diagram, why there has been overfishing of crawfish in Louisiana. Label and explain each curve in the diagram.
(A) The statute of limitations for adverse possession in Michigan is 15 years. The following appears in the office of a Michigan county register of deeds for a certain parcel of land:A conveys to B in 1980 C conveys to D in 1998 D conveys to E in 2009 E conveys to F in 2016 Who owns the land in
Consider a conflict between a factory and a laundry whose business is damaged by pollution from the factory. The marginal profits of the factory vary with its output Q according to the equation MPF = 90 – 1/2 Q. If the factory produced no output, the profits of the laundry would be $5000, but
The courts have indicated that a corporation making banana-flavored gum can’t include the fact that it is yellow as part of the trademark. Explain why.
Explain how and why informal property rights have been created by surfers in some locations in California.
Explain the difference between the bona fide purchaser rule and the original ownership rule. How might these rules differ in their effect on theft?
Why is there no limit on the duration of a trademark, unlike patents and copyrights?Also, why do many manufacturers use several different trademarks for different products that they make?
Mr. X has owned and operated a tattoo parlor in Harper Woods for ten years. The city then passes an ordinance making tattooing illegal. Does Mr. X have a possible remedy under the law of eminent domain? Discuss.
(a) What is the economic justification for the government’s power of eminent domain?(b) Persons who wish to acquire a large area of land for some project like a shopping mall or amusement park face the same kinds of problems the government does when it acquires land for an expressway; however,
It is possible for a jury in a criminal case to make two types of mistakes: they could convict a defendant who is innocent, or they could acquit a defendant who is guilty.Suppose the social cost of acquitting a guilty defendant is $100, while the social cost of convicting an innocent defendant is
What is the standard of proof in a criminal case? How and why is it different from the standards of proof in civil cases?
What theories have been offered to explain why a Supreme Court Justice would vote for certiorari, i.e., vote in favor of a case being reviewed by the Supreme Court?
Suppose there are only three persons in an economy: Mr. A, Ms. B, and Ms. C.Indicate the height of the demand curve for the first three units of the good described in Table 2.3 if (a) it is not a public good; and (b) it is a public good
Suppose that, if Bill becomes an actor, there is an 90 percent probability that his income will be $20,000 and a 10 percent probability it will be $200,000. (a) What is Bill’s expected income as an actor? (b) If Bill becomes an accountant, his income is certain to be $37,000. Suppose that, apart
Suppose Monty Hall offers Bill Davis a choice between two alternatives: (a) a gamble, where the probability of winning $400 is three to four, and the probability of winning $100 is one in four; and (b) a guaranteed payment of $318. Mr. Davis choosesalternative (b). Is he risk-neutral,
Table 2.2 appears in the textbook Price Theory and Applications by Peter Pashigian.It refers to the number of days per season spent on the disabled list by various pitchers who signed multi-year contracts after they became eligible for free agency in 1976.Explain everything that is going on here.
Explain why Empire Blue Cross and Blue Shield decided to drop health insurance cover for the 700 lawyers who were members of the New York State Bar Association. Make sure your explanation is in economic terms, not in the language of the “man on the street.”
Suppose in Wayne County the income-elasticity of demand for Palm Pilots is 0.25.If Wayne County income increases by 20 percent, what is the percentage change in demand for Palm Pilots?
Consider the cross-price elasticity of demand for air travel and rental cars. Would you expect it to be positive, negative, or zero? Your answer should explain exactly what the cross-price elasticity of demand is.
Mr. Z buys twelve bottles of champagne a year when the price is $45 per bottle. The following year the price of champagne increases to $55 and he buys eight bottles. What is the price-elasticity of his demand for champagne?
The following statement is taken from the Wall Street Journal, March 30,1966: “A retired Atlanta railroad conductor complains that he can no longer visit his neighborhood tavern six times a week. Since the price of his favorite beer went up to 30¢ a glass from 25¢, he has been dropping in only
Suppose the monthly demand for fax machines in a small city can be expressed by the equation P = 600 – 30Q, and the monthly supply can be expressed by the equation P =100 + 20Q. What is the equilibrium price and quantity sold of fax machines?
Consider two individuals who want to get a tuneup for their cars in the morning before going to work: Bill Fletcher, a lawyer who earns $120 per hour, and Dave Miller, a bill collector who earns $60 per hour. They each have to choose between the following three garages offering tuneups, which have
Which is larger, the income effect or the substitution effect?
Would you expect, in some cases, to see only an income effect or only a substitution effect? Explain.
Does a change in price have both an income effect and a substitution effect? Does a change in income have both an income effect and a substitution effect?
Does the “income effect” involve a change in income? Explain.
What is an income effect?
What is a substitution effect?
How can you tell which indifference curves represent higher or lower levels of utility?
How many indifference curves does a person have?
Why are indifference curves steep on the left and flatter on the right?
Why do indifference curves slope down?
What point is preferred along an indifference curve?
How does the appearance of positive slope differ from negative slope and from zero slope?
Why is a bar chart the best way to illustrate comparisons?
What do the slices of a pie chart represent?
What is slope on a line graph?
Name three kinds of graphs and briefly state when is most appropriate to use each type of graph.
The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded(Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. Price ($) Qd Qs 60 230 180 70 200 200 80 170 220 Table 34.6 Pepperland
You have just been put in charge of trade policy for Malawi. Coffee is a recent crop that is growing well and the Malawian export market is developing. As such, Malawi coffee is an infant industry. Malawi coffee producers come to you and ask for tariff protection from cheap Tanzanian coffee. What
Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply(s) for cameras in Thailand and Japan is described by the following functions:
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you
Economists sometimes say that protectionism is the “second-best” choice for dealing with any particular problem. What they mean is that there is often a policy choice that is more direct or effective for dealing with the problem—a choice that would still allow the benefits of trade to occur.
In principle, the benefits of international trade to a country exceed the costs, no matter whether the country is importing or exporting. In practice, it is not always possible to compensate the losers in a country, for example, workers who lose their jobs due to foreign imports. In your opinion,
What are some examples of innovative products that have disrupted their industries for the better?
An economic union requires giving up some political autonomy to succeed. What are some examples of political power countries must give up to be members of an economic union?
Why do you think that the GATT rounds and, more recently, WTO negotiations have become longer and more difficult to resolve?
Why might a tax on domestic consumption of resources critical for national security be a more efficient approach than barriers to imports?
Why might the unsafe consumer products argument be a more effective strategy (from the perspective of the importing country) than using tariffs or quotas to restrict imports?
Is it legitimate to impose higher safety standards on imported goods than exist in the foreign country where the goods were produced?
How do you think Americans would feel if other countries began to urge the United States to increase environmental standards?
Microeconomic theory argues that it economically rationale (and profitable) to sell additional output as long as the price covers the variable costs of production. How is this relevant to the determination of whether dumping has occurred?
How can governments identify good candidates for infant industry protection? Can you suggest some key characteristics of good candidates? Why are industries like computers not good candidates for infant industry protection?
How would direct subsidies to key industries be preferable to tariffs or quotas?
Why do you think labor standards and working conditions are lower in the low-income countries of the world than in countries like the United States?
If trade barriers hurt the average worker in an economy (due to lower wages), why does government create trade barriers?
From the Work It Out "Effects of Trade Barriers,"you can see that a tariff raises the price of imports.What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?
Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.
What are some ways that governments can help people who lose from trade?
Why is trade a good thing if some people lose?
Who gains and who loses from trade?
If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?
What is the general trend of trade barriers over recent decades: higher, lower, or about the same?
Name several of the international treaties where countries negotiate with each other over trade policy.
What is the national interest argument for protectionism with regard to certain products?
Do the rules of international trade require that all nations impose the same consumer safety standards?
What is the “race to the bottom” scenario?
What is dumping? Why does prohibiting it often work better in theory than in practice?
What are main reasons for protecting “infant industries”? Why is it difficult to stop protecting them?
Is international trade likely to have about the same effect on everyone’s wages?
How is international trade, taken as a whole, likely to affect the average level of wages?
Is international trade likely to have roughly the same effect on the number of jobs in each individual industry?
Does international trade, taken as a whole, increase the total number of jobs, decrease the total number of jobs, or leave the total number of jobs about the same?
How does protectionism affect the price of the protected good in the domestic market?
Name and define three policy tools for enacting protectionism.
Who does protectionism protect? What does it protect them from?

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

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