1. Some industries are dominated by women because women are more productive than men in those industries. For example, mushroom pickers tend to be women because their smaller hands don't bruise the mushrooms. Often men are able to compete with women in this market by working for lower wages. What would happen if mushroom workers formed a union and required all workers to be paid the same wage rate?
2. Natural gas produced by fracking is a substitute for some goods i.e., demand for these other goods falls when the price of natural gas falls. Nevertheless, natural gas is also a complement for other goods - their demands rise when the price of natural gas falls.
Identify at least two goods that are substitutes for natural gas and two that are complements. Considering both producers and consumers of those goods, analyze how they are either made better off or worse off as a result of the spread of fracking.
3. Do you think rent controls would be good or bad for each of the following situations. Explain.
(a) a young married couple with two children moving to a new town;
(b) a prospective tenant who's a drinker and smoker;
(c) a middle aged tenant who does not contemplate moving;
4. Do you think it would be good or bad for government to subsidize the following infrastructure projects. Explain.
a) Hosting an Olympic Games where the added infrastructure necessary would be a media center, which has an alternate use as a convention or community center, an arena, and temporary construction;
b) An improvement of a very busy highway (like interstate 635) where service road access has been expanded and toll lanes have been added partially underground;
c) A 50 mile highway to connect two towns in Alaska, a region that is often affected by snow and freezing rain. The two towns are currently served by ferry service.
5. Why might one consequence of a higher minimum wage be that employers of low-skilled workers tend to reduce the number of sick days, amount of on-the-job training and health insurance, length of vacations, and number of coffee breaks? Use a graph as part of your answer. Finally, why might employers be quicker to fire workers for tardiness and other minor transgressions?
6. (a) Should college students be required to pay the full cost of their own education? In helping you think about your answer, consider who benefits from a person's obtaining of a college education.
(b) If education is an investment designed to secure a higher future income, it would then stand to reason that people should just borrow the money - the way business firms borrow to finance investment. One problem is that firms (banks) may be unlikely to lend money to a student who has no collateral or job prospects. A solution may be to have the government step up and provide the loan. Using a set of supply and demand curves, show what would happen in the market for college education as a result of a government policy of subsidizing student loans.
(c) Compare this with a situation where there were only private lenders for a college education. What would be the advantages? What would be the disadvantages?
7. In regards to his hiring practices Howard Schultz, chairman and CEO of Starbucks says that: "We need happy people-we're a people company that serves coffee, not the other way around." Do you think that "happiness" would make for an effective job market signal? Explain.
8. It has been argued that politicians tend to gain from price controls and hence they advocate them. What line of reasoning would support that argument?