Microeconomics Private And Public Choice 11th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson - Solutions

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=+Would employees be helped if all the tax was imposed on employers? (Hint: You may want to consult the section on tax incidence in Chapter 4.)
=+6. The Social Security payroll tax is split equally between the employee and the employer. Would it make any difference if the entire tax was imposed on employees?
=+5. Does the current Social Security system promote income equality? Why or why not?
=+4. How does Social Security affect the economic well- being of blacks relative to whites and Hispanics? Explain.
=+What are the advantages and disadvantages of a private option system? If given the opportunity, would you choose the private option or stay with the current system? Why?
=+3. Do you think workers should be permitted to invest all or part of their Social Security contribution in private investment funds?
=+Are there real assets in the Social Security Trust Fund that can be used to pay future benefits? Will the trust fund help avert higher future taxes and/or benefit reductions when the baby boomers retire? Why or why not?
=+ *2. Why does the Social Security system face a crisis?
=+1. Is the Social Security system based on the same principles as private insurance? Why or why not?
=+Should the Social Security system be reformed?
=+ How does it impact the economic status of blacks, Hispanics, and those with fewer years of life expectancy?
=+ Does Social Security transfer income from the rich to the poor?
=+3. Indicate how the production, marketing, and distribu- tion of each of the following are likely to be influ- enced by the development of the Internet: (a) popular music, (b) movies, (c) automobiles, (d) commercial employment agencies, (e) beautician services, and (f) health care. Briefly
=+*2. The share of airline tickets bought over the Internet has grown rapidly, whereas the percentage of gro- ceries purchased online remains minuscule. What factors likely explain this difference?
=+How is the Internet likely to influence productivity and the growth of output in the years immediately ahead?
=+1. What effect does the Internet have on the efficiency of markets? Explain.
=+Do you think the increase in the number of people who pay no taxes will affect the efficiency of the political process? Why or why not?
=+ *5. As the result of changes during the last two decades, the bottom half of income recipients now pay little or no personal income tax. Rather than paying taxes, many of them now receive payments back from the IRS as the result of the Earned Income Tax Credit and Child Tax Credit programs.
=+What was the top marginal personal income tax rate in 1980? What is the top rate now? Are you in favor of or opposed to the lower marginal rates? Why?
=+4. Compared to the situation prior to 1981, the mar- ginal tax rates imposed on individuals and families with high incomes are now lower.
=+ Do you think this is an attractive feature of the current tax system? Why or why not?
=+ 3. Because the structure of the personal income tax is progressive, a larger share of income is taxed at higher rates as income grows. Therefore, economic growth automatically results in higher taxes unless offsetting legislative action is taken.
=+2. During the last four decades, a smaller share of the federal budget has been allocated to national de- fense and a larger share to income transfers and health care. Does economics indicate that this change will help Americans achieve higher living standards?
=+ How much does it cost for the government to raise an additional dollar (or $1 billion) of tax revenue?
=+*1. How do taxes influence the efficiency of resource use?
=+ How does the size of government in the United States compare with the size of governments of other countries?
=+Do they pay a smaller share of taxes today than they did a couple of decades ago?
=+Do the rich pay their fair share of taxes?
=+17. "Physical obstacles like bad roads and stormy weather increase transaction costs and thereby re- duce the volume of trade. Tariffs, quotas, exchange rate controls, and other human-made trade restric- tions have similar effects." Evaluate this statement. Is it true? Why or why not?
=+*16. "Tariffs not only reduce the volume of imports, they also reduce the volume of exports." Is this statement true or false? Explain your answer.
=+ 15. As U.S. trade with low-wage countries like Mexico increases, will wages in the United States be pushed down? Why or why not? Are low-wage workers in the United States hurt when there is more trade with Mexico? Discuss.
=+ Why do you think Congress is supportive of this policy?
=+ How does the quota affect the efficiency of resource allocation in the United States?
=+*14. The United States uses an import quota to maintain the domestic price of sugar well above the world price. Analyze the impact of the quota. Use supply and demand analysis to illustrate your answer. To whom do the gains and losses of this policy accrue?
=+13. "The U.S. is suffering from an excess of imports. Cheap foreign products are driving American firms out of business and leaving the U.S. economy in shambles." Evaluate this view.
=+What is the ma- jor effect of international and interstate trade?
=+*12. Does international trade cost American jobs? Does interstate trade cost your state jobs?
=+11. In recent years, the European Union has reduced trade barriers among its members, and most EU members now use a common currency. What impact will these changes have on European economies?
=+trade barriers to keep out cheap Japanese goods if the source of their low price is governmental subsidies? Why or why not?
=+10. It is often alleged that Japanese producers receive subsidies from their government permitting them to sell their products at a low price in the U.S. market. Do you think we should erect
=+9. How do tariffs and quotas differ? Can you think of any reason why foreign producers might prefer a quota rather than a tariff? Explain your answer. *
=+Would the employment in California be higher? Explain.
=+b. Would Californians be better off if they bought goods produced only in California?
=+a. Would Americans be better off if more of them paid higher prices in order to "buy American" rather than purchase from foreigners? Would U.S. employment be higher? Explain.
=+8. "Getting more Americans to realize that it pays to make things in the United States is the heart of the competitiveness issue." (This is a quote from an American business magazine.)
=+ How would that af- fect employment in the U.S. auto industry? (Hint: Think about how higher steel prices will impact the cost of producing automobiles.) *
=+ 7. Suppose that a very high tariff were placed on steel imported into the United States.
=+*6. "An increased scarcity of a product benefits produc- ers and harms consumers. In effect, tariffs and other trade restrictions increase the domestic scarcity of products by reducing the supply from abroad. Such policies benefit domestic producers of the restricted product at the expense of
=+5. "The average American is hurt by imports and helped by exports." Do you agree or disagree with this statement? *
=+b. "Economic analysis suggests that there is good reason to expect that trade restrictions will exist in the real world."
=+a. "Tariffs and import quotas promote economic in- efficiency and reduce the real income of a nation. Economic analysis suggests that nations can gain by eliminating trade restrictions."
=+4. Can both of the following statements be true? Why or why not?
=+the standard of living in the "divided" United States have been affected? Explain. *
=+3. Suppose as the result of the Civil War that the United States had been divided into two countries and that, through the years, high trade barriers had grown up between the two. How might
=+2. "Trade restrictions limiting the sale of cheap foreign goods in the United States are necessary to protect the prosperity of Americans." Evaluate this state- ment made by an American politician.
=+ What are the characteristics of the things we sell to foreigners? *
=+ What are the characteristics of the items we buy from foreigners?
=+1. Why do American households and businesses buy things from foreigners?
=+Does trade with low-wage countries depress wage rates in high-wage countries like the United States?
=+ Do trade restrictions create jobs?
=+d. The family with the higher income received it as an inheritance from parents who just died.
=+c. The family with the higher income derived most of its income from the farm subsidy program.
=+b. The family with the higher income is headed by a person who completed a college degree, while the other family is headed by someone who dropped out of high school.
=+a. The family with the higher income has both a husband and wife working, while the other family has chosen for the wife to remain home with the children rather than work in the labor force.
=+What is your ini- tial reaction? Compare and contrast your views de- pending upon the following:
=+ 14. Suppose one family has $100,000 while another has only $20,000. Is this outcome fair?
=+13. Was the poverty rate increasing or decreasing prior to the War on Poverty initiated by the Johnson ad- ministration? As income transfer programs accompa- nying the War on Poverty increased beginning in the latter half of the 1960s, what happened to the poverty rate?
=+12. "Means-tested transfer payments reduce the current poverty rate. However, they also create an incentive structure that discourages self-sufficiency and self- improvement. Thus, they tend to increase the future poverty rate. Welfare programs essentially purchase a lower poverty rate today in
=+discuss whether the fairness of the process or the fairness of the out- come is more important, and how they differ.
=+11. The outcome of a state lottery game is certainly a very unequal distribution of the prize income. Some players are made very rich, while others lose their money. Using this example,
=+10. Large income transfers are targeted toward the elderly, farmers, and the unemployed, regardless of their eco- nomic condition. Why do you think this is so?
=+ How might you minimize the personal effects of this tax?
=+ 9. Some people argue that taxes exert little effect on people's incentive to earn income. Suppose you were required to pay a tax rate of 50 percent on all money income you earn while in school. Would this affect your employment?
=+ 8. What groups are overrepresented among those with relatively low incomes? Do the poor in the United States generally stay poor? Why or why not?
=+ What is Sue's implicit marginal tax rate for this job?
=+*6. Because income transfers to the poor typically in- crease the implicit marginal tax rate they confront, does a $1,000 transfer payment necessarily increase the income of poor recipients by $1,000? Why or why not? "
=+ Is it a proper func- tion of government to tax some people in order to pro- vide benefits to others? Why or why not? Discuss.
=+5. Do individuals have a property right to income they acquire from market transactions?
=+If the nation had attained complete equal- ity of opportunity, what pattern of numbers would emerge? Explain.
=+ what pattern of numbers would appear in the table?
=+*4. Consider a table such as Exhibit 3 in which the fam- ily income of parents is grouped by quintiles down the first column, and that of their offspring is grouped by quintiles across the other columns. If there were no intergenerational mobility in this country,
=+ If there is substantial in- come mobility in a society, how does this influence the importance of income distribution data?
=+2. Is annual money income a good measure of economic status?
=+Is the fi- nal outcome more important than the process that generates the income? *
=+What criteria do you think should be used to judge the fairness of the distribution of income?
=+1. Do you think the current distribution of income in the United States is too unequal? Why or why not?
=+ Did the War on Poverty help reduce the poverty rate?
=+How has the poverty rate changed in recent decades?
=+Do the rich stay rich while the poor stay poor?
=+ How much income mobility exists?
=+ How much income inequality is there in the United States?
=+16. Will political officials be more likely than private investors and entrepreneurs to channel funds into wealth-creating projects? Why or why not? Discuss.
=+15. "In a world of uncertainty, it is important that entre- preneurs be able to introduce new products and try out innovative ideas. But it is also important that un- productive projects be brought to a halt." Evaluate this statement. *
=+your summerjob. You figure that the program will increase your earn- ings by $500 per year for each of the next ten years. Beyond that, it is not expected to affect your earn- ings. If you take the program, you will have to bor- row the funds at an 8 percent rate of interest. From a strictly
=+14. Suppose that you are considering whether to enroll in a summer computer training program that costs $2,500. If you take the program, you will have to give up $1,500 of earnings from
=+new refrigerator will reduce your elec- tric bill by $150 per year and will have a market value of $200 after five years. If necessary, you can borrow money from the bank at an 8 percent rate of interest. Which option should you choose? *
=+13. Suppose that you are moving into a new apartment you expect to rent for five years. The owner of the apartment offers to provide you with a used refriger- ator for free and promises to maintain and repair the refrigerator during the next five years. You also have the option of buying a new,
=+c. Can you think of any disadvantages of buying the lottery earnings rather than a bond?
=+b. If the discount rate is in the 10 percent range, is the sale price of $1.2 million reasonable?
=+ what is the present value of the ticket when the appropriate rate for discounting the future income is thought to be 10percent?

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Microeconomics Private And Public Choice 11th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson - Solutions

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