WHAT OTHER OBJECTIVE BESIDES HIGHER WAGES DO UNIONS PURSUE?

16 May WHAT OTHER OBJECTIVE BESIDES HIGHER WAGES DO UNIONS PURSUE?

Suppose that the cost of living increase, thereby reducing the purchasing power of your income. If your money wage doesn’t increase you may work more hours because of this cost of living increase. Is this response predominantly an income effect or a substitution effect? Explain.

19. Suppose that two jobs are exactly the same except that one is performed in an air- conditioned workplace. How could you measure the value workers attach to such a job amenity?

20. Why might permanent wage differences occur between different markets for labor or within the same labor market?

21. Both industrial unions and craft unions attempt to raise their members’ wages, but each goes about it differently. Explain the difference in approaches and describe the impact this difference have an excess quantity of labor supplied.

22. What other objective besides higher wages do unions pursue?

23. What strategies do unions employ to achieve their wage objectives?

24. What trends have worked against the union movement during the last half century? What has happened to the effectives of strikes and why?

25. Review the logic underlying the exhibit below. Then determine the effect, on the industry and a typical firm, of an increase in the demand for industry output. Show your conclusion on a graph. Does the magnitude of the increase in demand make a difference?

26. Why might firms in industries with high fixed costs be inclined to prevent strikes or end strikes quickly?

27. Why are unions more effective at raising wages in oligopolistic industries than in competitive industries

28. Describe the three types of government regulation of business.

29. Define market power, and then discuss the rationale for government regulation of firms with market power.

30. The following graph represents a natural monopoly.

a. Why is this firm considered a natural monopoly?

b. If the firm is unregulated, what price and output would maximize its profit? What would be its profits or loss?

c. If a regulatory commission establishes a price with the goal of achieving allocative efficiency. What would be the price and output? What would be the firms profit or loss?

d. If a regulatory commission establishes a price with the goal of allowing the firm a normal profit, what would be the price and output? What would be the firm’s profits or loss?

e. Which one of the prices in parts (b)(c), and (d) maximizes consumer surplus? What problem, if any occurs at this price?

31. Why do producers have more interest in government regulations than consumers do?

a. Compare and contrast the public-interest and special-interest theories of economic regulation. What is the capture theory of regulation?

b. Which theory of regulation explains why the massive fraud of Bernie Madoff went undetected for years.

32. Identify the type of anticompetitive behavior illustrated by each of the following:

a. A university requires buyers of seasons tickets for its basketball games to buy season tickets for it’s football games as well

b. Dairies that bid on contracts to supply milk to school districts collude to increase what they charge

c. The same individual serves on the boards of directors if General Motors and Ford.

d. A large retailer sells merchandise below cost in certain regions to drive competitors out of business.

e. A producer of soft drinks sells to a retailer agrees not to buy from the producer’s major competitor.

33. Identify the four U.S. merger waves and explain the driving force behind each.

34. Calculate the Herfindahi-Hirschman index for each of the following industries. Which industry is the most concentrated?

a. An industry with five firms that the following market shares: 50 percent, 30 percent, 10 percent 5 percent, and 5 percent

b. An industry with five firms that have the following market shares 60 percent, 20 percent, 10 percent, 5 percent and 5 percent

c. An industry with five firms, each of which has a 20 percent market shared

35. William Shepherd’s research of U.S. Industries showed a clear trend in the competitiveness of the U.S. economy between 1958 and 2000. Is the economy growing more or less competitive and how did Shepherd explain this trend?

36. Complete each of the following sentences:

a. Resources for which periodic use can be continued indefinitely are known as ______ resources.

b. Resources that are available only in a fixed amount are ________ resources.

c. The possibility that a open-access resource is used until the net marginal value of additional use equals zero is known as the _____.

37. Why have authorities found it so difficult to regulate the fishing catch in the open ocean to allow for a sustainable yield?

38. Suppose you wish to reduce a negative externality by imposing a tax on the activity that creates that externality. When the amount of the externality produced per unit of output increases as output increases, the correct tax can be determined by using a demand-supply diagram; show this. Assume that the marginal private cost curve slopes upward.

39. Review the situation in the graph above. If the government sets the price of electricity at the socially optimal level, why is the net gain equal to triangle abc, even though consumers now pay a higher price for electricity? What would the net gain be if the government set the price above the optimal level?

40. Use data below to answer the following questions.

a. What is the marginal external cost of production

b. What level is produced if there is no regulation of the externality

c. What level should be achieving economic efficiency?

d. Calculate the dollar value of the net gain to society from correcting the externality.