Microeconomics Theory And Applications With Calculus 5th Global Edition Jeffrey Perloff - Solutions

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Discuss the three concepts on which the law of increasing costs is based.
Do you know any entrepreneurs? What do they do?
Why is scarcity central to economics?
Although the U.S. is one of the world’s wealthiest nations, some of the federal government’s budget decisions are severely constrained by scarcity. Can you think of one such decision that was in the recent economic news?
Could a nation’s production possibilities curve ever shift inward? What might cause such a shift to occur?
Give an example of an opportunity cost for an individual and a nation.
The century was termed “The American Century.” (LO6)
Passage of the in 1944 enabled nearly 8 million veterans to go to school. (LO3)
The quarter century that was completely dominated by the great industrialists like Andrew Carnegie and John D. Rockefeller began in the year. (LO1)
Since the end of World War II there have been recessions. (LO4)
The main factor in fi nally bringing us out of the Great Depression was . (LO2, 3)
Rapid technological change in agriculture during the fi rst half of the 19th century was brought on mainly by . (LO1)
During President Dwight D. Eisenhower’s two terms, there were recessions. (LO4, 5)
Today one full-time American farmer feeds about people. (LO5)
Bills providing for Medicare and Medicaid were passed during the administration of President. (LO5)
In 1933, our offi cial unemployment rate was%. (LO2)
The country with the world’s largest output is. (LO1)
The worst recession we had since World War II occurred in . (LO4)
In 1790, about of every 10 Americans lived on farms. (LO1)
The low point of the Great Depression was reached in the year . (LO2)
Which of the following is the most accurate statement? (LO7)a) Like the 20th century, the 21st century will defi nitely be “the American Century.”b) Although we have had some recent problems, our economy is strong enough to continue to support our present global military commitments indefi
If you could blame just one person or group of people that caused the Great Depression, which one of the following would you choose? (LO1)a) President Herbert Hooverb) President Franklin Rooseveltc) the Federal Reserve Boardd) the bankers
Our most rapid job growth was in the period from. (LO5, 6)a) 2000 to 2005b) 1995 to 2000c) 1978 to 1983d) 1953 to 1958
Which statement is the most accurate? (LO6)a) The 21st century will almost defi nitely be another“American Century.”b) The 21st, rather than the 20th, will be called“The American Century.”c) The 21st century will defi nitely not be an“American Century.”d) Although we got off to a rocky
Who made this statement? “Once upon a time my opponents honored me as possessing the fabulous intellectual and economic power by which I created a worldwide depression all by myself.” (LO2)a) Franklin D. Rooseveltb) Herbert Hooverc) John F. Kennedyd) Ronald Reagane) Bill Clinton
Which statement is true? (LO2, 6)a) Although our economy was not performing well, college graduates from the classes of 2009 and 2010 received more job offers than any other graduating class in history.b) The economic downturn that began in December 2007 is the longest since the 1930s.c) Until the
What set off the Great Recession? (LO4, 6)a) The bursting of the housing bubble.b) The sharp decline in oil prices.c) The escalation of the war in Iraq.d) A surge in imports from China.
In the 1990s our economy has generated more than million additional jobs. (L05, 6)a) 5b) 10c) 15d) 20
Our longest uninterrupted economic expansion took place mainly in the decade of the . (LO5)a) 1940sc) 1960se) 1980sb) 1950sd) 1970sf) 1990s
There were no recessions during the administration of. (LO4, 5)a) Dwight D. Eisenhowerb) Ronald Reaganc) Bill Clintond) George W. Bush
In the 1970s, our economy suffered from. (LO5)a) infl ation but not stagnationb) stagnation but not infl ationc) infl ation and stagnationd) neither infl ation nor stagnation
Our economic growth began to slow markedly. (LO5)a) in the early 1940sb) in the early 1960sc) in the early 1970sd) between 1982 and 1985
There was a major tax cut in . (LO5)a) both 1964 and 1981b) neither 1964 nor 1981c) 1964, but not in 1981d) 1981, but not 1964
Most of the recessions since World War II lasted. (LO4)a) less than 6 monthsb) 6 to 12 monthsc) 12 to 18 monthsd) 18 to 24 monthse) 24 to 36 months
Medicare and Medicaid were inaugurated under the administration of . (LO5)a) Franklin D. Rooseveltb) Harry S. Trumanc) Dwight D. Eisenhowerd) John F. Kennedye) Lyndon B. Johnson
The longest economic expansion in our history began in . (L05)a) the spring of 1961b) the winter of 1982c) the spring of 1991d) the fall of 1993
Compared to our economic history between 1870 and 1945, our economic history since 1945 could be considered . (LO4, 5)a) much more stablec) much less stableb) about as stable
The transcontinental railroads completed in the 1860s, 1870s, and 1880s all bypassed the . (LO1)a) Northeastd) mountain statesb) Midweste) Far Westc) South
The infl ation rate declined during the presidency of. (LO5)a) both Eisenhower and Reaganb) neither Eisenhower nor Reaganc) Reagand) Eisenhower
Between 1929 and 1933, output fell . (LO2)a) by about one-tenthc) by about one-halfb) by about one-thirdd) by about two-thirds
The year 2009 could be described as having had a relatively unemployment rate and a relatively rate of infl ation. (LO6)a) low, lowc) high, lowb) high, highd) low, high
Each of the following was a year of high unemployment except . (LO4)a) 1933c) 1944e) 1982b) 1938d) 1975
Between 1939 and 1944, federal government spending rose by more than . (LO3)a) 100%c) 300%e) 500%b) 200%d) 400%
At the time of the American Revolution, about of every 10 Americans lived on a farm. (LO1)a) onec) fi vee) nineb) threed) seven
Which statement is true? (LO4, 5)a) There was a great deal of stagfl ation in the 1970s.b) We had full employment for most of the 1980s.c) We have had seven recessions since World War II.d) None of the above.
Which statement is false? (LO4, 5)a) President Eisenhower presided over three recessions.b) Our economy has not had an unemployment rate below 5 percent since the early 1940s.c) There were six straight years of economic expansion under President Reagan.d) None of the above. (All of the above are
In the early 19th century, the United States suffered from a scarcity of . (LO1)a) land and laborb) land—relative to laborc) labor—relative to landd) neither land nor labor
When our country was being settled, there was an acute shortage of agricultural labor.Over the last 100 years millions of Americans have left the farms. How have we managed to feed our growing population with fewer and fewer farmers?
Describe, in as much detail as possible, the impact of the Great Depression on the lives of those who lived through it. If you know anyone who remembers the 1930s, ask him or her to describe those times.
1. 6.2 Can you change the payoffs in the table in the Chal lenge Solution so that the firms choose to invest in safety? Explain.
1. 6.1 In the Challenge Solution, what is the minimum fine the government could levy on firms that do not invest in safety that would lead to a Nash equilib rium in which both firms invest?
1. 5.8 When is statistical discrimination privately inefficient?When is it socially inefficient? Does it always harm members of the discriminated-against group? Explain.6. Challenge
1. 5.7 In Exercises 4.5 and 4.6, describe the equilibrium if cl … ch. (Hint: See Solved Problem 18.4.) M
1. 5.6 In Exercise 4.5, under what conditions is a pooling equi librium possible? (Hint: See Solved Problem 18.4.) M
1. 5.5 Education is a continuous variable, where eh is the years of schooling of a high-ability worker and el is the years of schooling of a low-ability worker. The cost per period of education for these types of work ers is ch and cl , respectively, where cl 7 ch. The wages they receive if
1. 5.4 Suppose that you are given wh, wl , and θ in the educa tion signaling model. For what value of c are both a pooling equilibrium and a separating equilibrium pos sible? For what value of c are both types of equilibria possible, and do high-ability workers have higher net earnings in a
1. 5.3 Some firms are willing to hire only high school gradu ates. Based on past experience or statistical evidence, these companies believe that, on average, high school graduates perform better than nongraduates. How does this hiring behavior compare to statistical discrimination by employers on
1. 5.2 Some universities do not give letter grades. One ratio nale is that eliminating the letter-grade system reduces pressure on students, thus enabling them to learn more.Does this policy help or hurt students? (Hint: Consider the role grades play in educating and signaling.)
1. 5.1 In the education signaling model, suppose that firms can pay c* to have a worker’s ability determined by a test. Does it pay for a firm to make this expenditure?
1.4.2 Plumbers, electricians, and professionals from other trades usually don’t advertise their prices. What effect is it likely to have on the equilibrium prices of the services offered by them? Explain.5. Problems Arising from Ignorance When Hiring
1. *4.1 In Solved Problem 18.3, if the vast majority of all consumers knows the true prices at all stores and only a few shoppers have to incur a search cost to learn the prices, is the equilibrium a single price at
1. 3.3 The advertising of prescription-only medicines direct to consumers is prohibited by the Therapeu tic Goods Act 1989 in Australia, but advertising to health professionals is permitted. What effect should such restraints have on equilibrium prices?4. Market Power from Price Ignorance
1. 3.2 Some food manufacturers sell a national brand prod uct for more than an identical private-label product.Is such a firm a noisy monopoly (or oligopoly)?
1. 3.1 Explain how a monopoly firm can price discriminate by advertising sales in newspapers or magazines that only some of its customers see. Is it a noisy monopoly?
1. 2.7 The Application “Adverse Selection and Remanufac tured Goods” reports that, for electronic goods sold on eBay, higher seller feedback scores reduce the price dif ferential between new goods and remanufactured goods.Explain why this pattern is consistent with the theory of adverse
1. 2.6 Grocery stores, hotels, and other firms give their cus tomers free loyalty cards. A customer who uses the card receives a discount. Are these firms signaling, screening, price discriminating, or engaging in other activities?
1. 2.5 What actions do John Hancock Life Insurance and other insurance companies take to reduce adverse selec tion? (Hint: See the Application “Discounts for Data.”)
1. 2.4 According to Edelman (2011), the widely used online “trust” authorities issue certifications without adequate verification, giving rise to adverse selec tion. Edelman finds that TRUSTe certified sites are more than twice as likely to be untrustworthy as uncertified sites. Explain why.
1. *2.3 A firm spends a great deal of money in advertis ing to inform consumers of the brand name of its mushrooms. Should consumers conclude that its mushrooms are likely to be of higher quality than unbranded mushrooms? Why or why not?
1. *2.2 In July 2016, China implemented its first earthquake insurance policy. It allows homeowners to buy insur ance from private Chinese insurers to cover loss and damage to residential property caused by earthquakes of magnitude of 4.7 Richter or over. The maximum payout is 1 million yuan.
1. 2.1 Some states prohibit insurance companies from using car owners’ home addresses to set auto insur ance rates. Why do insurance companies use home addresses? What are the efficiency and equity impli cations of forbidding such practices?
1. 1. 13 Many wineries in the Napa Valley region of California enjoy strong reputations for producing high-quality wines and want to protect those reputations. Fred T.Franzia, the owner of Bronco Wine Co., sold Napa brand wines that do not contain Napa grapes (Julia Flynn, “In Napa Valley,
1. 1. 12 In Solved Problem 18.2, will any of the firms pro duce high-quality wallets if the cost of producing a higher-quality wallet is only $11? Explain. M
1. 1. 11 In Solved Problem 18.2, show that, if all the other firms produce a high-quality wallet, it pays for one firm to start producing a low-quality wallet. M
1. 1. 10 It costs $12 to produce a low-quality electric stapler and $16 to produce a high-quality stapler. Consum ers cannot distinguish good staplers from poor sta plers when they make their purchases. Four firms produce staplers. Consumers value staplers at their cost of production and are risk
1. 1. 9 Suppose that everyone in the used-car example in the text is risk neutral, potential car buyers value lemons at $2,000 and good used cars at $10,000, the reservation price of lemon owners is $1,500, and the reservation price of owners of high-quality used cars is $8,000. The share of
1. 1. 8 Suppose that potential used-car buyers value high quality used cars at €10,000 and low-quality used cars at €3,000. Owners of high-quality used-cars have a reservation price of €8,600, while the reser vation price for owners of low-quality used cars is€2,000. Everyone is risk
1. *1. 7 Many potential buyers value high-quality used cars at the full-information market price of p1 and lem ons at p2. A limited number of potential sellers value high-quality cars at v1 … p1 and lemons at v2 … p2.Everyone is risk neutral. The share of lemons among all the used cars that
1. 1. 6 What are the answers to Solved Problem 18.1 if cus tomers are willing to pay $10,000 for a good used car?
1. 1. 5 If you buy a new car and try to sell it in the first year—indeed, in the first few days after you buy it—the price that you get is substantially less than the original price.Use your knowledge about signaling and Akerlof’s lemons model to explain this much-lower price.
1. 1. 4 Suppose that half the population is healthy and the other half is unhealthy. The cost of getting sick is $1,000 for healthy people and $10,000 for unhealthy people. In a given year, any one person (regardless of health) either becomes sick or does not become sick. The probability that any
1. 1. 3 You want to determine whether a lemons problem occurs in the market for single-engine airplanes. Can you use any of the following information to help answer this question? If so, how?a. Repair rates for original-owner planes versus resold planes.b. The fraction of planes resold in each year
1. 1. 2 A grocery advertises a low price on its milk as a“loss leader” to induce customers to shop there. It finds that some people buy only milk there and do their other grocery shopping elsewhere. Is that an example of adverse selection or moral hazard?
1.1. 1 An insurance company insures many motorists, some who are very good drivers and some who are not so good. If it insures a motorist who then drives carelessly, is this an example of adverse selection or moral hazard?
1. 3. How can we determine the effect of a change in one variable on another if many other variables are changing at the same time?
1. 2. How confident are we in our results?
1.1. How can we best fit an economic relationship to actual data?
1. 7.4 Many firms pay bonuses or make contributions to an employee’s pension fund on an annual basis but require a vesting period—often eight to ten years—during which the employee must stay with the company to obtain ownership of these assets.An employee who leaves the company before the
1. 7.3 Curtis manages an electronics store in Wichita, Kansas. He considers carrying either cameras from Nikon Americas that come with a U.S. warranty or gray market Nikon cameras from a European supplier, which are the same cameras but their war ranties are only good in Europe. The gray market
1. 7.2 Adrienne, a manager of a large firm, must decide whether to launch a new product or make a minor change to an existing product. The new product has a 30% chance of being a big success and generating profits of $20 million, a 40% chance of being fairly successful and generating profits of $5
1. 7.1 In the Challenge Solution, show that shareholders’expected earnings are higher with the new compen sation scheme than with the original one.
1. 6.1 In the Application “Layoffs Versus Pay Cuts,” the firm uses either a pay cut or layoffs. Can you derive a superior approach that benefits both the firm and the workers? (Hint: Suppose that the firm’s profit or some other variable is observable.)7. Challenge
1. 5.1 List some necessary conditions for a firm to be able to sort potential employees by providing them with a choice of contracts.6. Checks on Principals
1. 4.7 In 2018, Amazon received a pair of patents for a wristband that can locate warehouse employees and track their hand movements in real time and an inventory management system using track ers and receivers to monitor workers’ movements and breaks. Can Amazon use these innovations to address
1. 4.6 Many substandard condo developments have been built by small corporations that declare bankruptcy or go out of business when legal actions are started against them by condo buyers. What legal remedies might reduce this moral hazard problem? If you were considering buying a condo in a new
1. 4.5 Used cars receive lower prices if they were rental cars than if they were owned by individuals. Does this price difference reflect adverse selection or moral hazard? Could car rental companies reduce this problem by carefully inspecting rental cars for damage when renters return such cars?
1. 4.4 A firm presently fines its employees who steal com pany property but is considering paying an efficiency wage as an alternative to discourage theft. Suppose that an employee can gain €800 from stealing and the probability of getting caught is 20%.a. What is the optimal fine for a
1. 4.3 Suppose a company’s policy is to fine employees if caught stealing from the company. Employees are monitored to prevent theft. If the gain from stealing is; 200 and the probability of being caught is 2%, what would be the minimum fine necessary to pre vent a risk-neutral employee from
1. *4.2 In Solved Problem 19.5 a firm calculates the optimal level of monitoring to prevent stealing. If G = $500 and θ = 20%, what is the minimum bond that deters stealing? M
1. 4.1 Many law firms consist of partners who share prof its. On being made a partner, a lawyer must post a bond, a large payment to the firm that will be for feited on bad behavior. Why?

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Microeconomics Theory And Applications With Calculus 5th Global Edition Jeffrey Perloff - Solutions

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