4. Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living? How to read this chart (from NY Times):To better understand, imagine a store offering a range of goods andservices, each for sale at the national-average price for that particularitem. Now, imagine a shopping cart filled with $100 worth of itemsfrom that store. In Hawaii, $100 buys about 85 percent of the goods inthe cart thanks to the high prices there. In other words, $100 in Hawaiifeels more like $85.60, compared to the national average. InMississippi, the opposite is true. With $100, you would be able to buythe cart's contents and more: the equivalent of $115.30 of goods andservices from the national-average store.What data is used in this analysis (from NY Times)?The Regional Price Parities are calculated using data alreadycollected for another indicator, the Consumer Price Index, whichserves as a measure of inflation. For that index, the governmenttracks prices of more than 200 goods and services, including men'ssuits, college textbooks, cereal, electricity and cars and trucks. It alsotallies rents, which are particularly variable among states. The "realvalue" of $100 in rent can range from roughly $63 in Hawaii to $160 inArkansas.

Answer: Purchasing power: purchasing power refers to the number of goods and services that can be…

Answered: Do you think that incomes and…

Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What would be the likely consequences for local employment if a large multinational corporation were to close its manufacturing plant in a small town? A. Local employment rates would increase due to the emergence of new businesses. B. Local employment rates would likely decrease due to the loss of jobs and associated spending. C. The closure would have no significant impact on local employment rates. D. The closure would increase the diversity of job opportunities in the small town.
1. According to part A of Table 5-1, what education level loses most (i.e., has the greatest decrease in wage) from immigration to the United States? Does this result depend on keeping the rental on capital constant? Explain why or why not. 2. Suppose that computers use 2 units of capital for each worker, so that KC = 2 • LC, whereas shoes use 0.5 unit of capital for each worker, so that KS = 0.5 • LS. There are 100 workers and 100 units of capital in the economy. a. Solve for the amount of labor and capital used in each industry. Hint: The box diagram shown in Figure 5-7 means that the amount of labor and capital used in each industry must add up to the total for the economy, so that Use these two equations to solve for LC and LS, and then calculate the amount of capital used in each industry using KC = 2 • LC and KS = 0.5 • LS. b. Suppose that the number of workers increases to 125 due to immigration, keeping total capital fixed at 100. Again, solve…
c) Assume she spends one hour writing book reports and two hours doing problem sets each week.Label the work she does ( producction) and the work she gets credit for(consumption) without trade A
Marginal Produt and Resources How would you determine the demand for a factor of production? What factors influence the supply and demand for labor? Examine how those factors impact market demand for labor. How do labor unions try to increase the demand for labor? What has made labor unions such an integral part of the workforce? What is the difference between the rates of return for a renewable and nonrenewable resource? How do the rates of return on capital and land differ between a renewable resource and nonrenewable resource? How does the growing demand for food, fuel, and export affect the market for land?
c) Assume she spends one hour writing book reports and two hours doing problem sets each week.Label the work she does ( producction) and the work she gets credit for(consumption) without trade A
4. Winona has 80 hours to divide between leisure and labor. Her utility function is u(r,c) = f(r) + c, when r represents hours of leisure, c represents dollars of consumption, and fis strictly concave. Winona's wage is wo = $15/hr. initially, then it rises to wi = $20/hr. (i) Explain what happens to Winona's labor supply when the wage rises, and why. (ii) Explain how the answer to (i) would change if Winona were to win a lottery.