Microeconomics
Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter 5, Problem 3P

Sub part (a):

To determine

The Bribe income.

Sub part (a):

Expert Solution
Check Mark

Explanation of Solution

Bribing takes place when the individuals corrupts an official and make him favorable towards them. People use money or other valuable assets or materials to convince the official and make him issue the laws favorable to them.

The bribes cost $1,000 each. There are 52 weeks in a year in which bribing needs to done. The officer visits 2 houses in a week. Thus, the amount that the officer makes through bribing can be calculated by multiplying the total weeks with the number of visits per week and the amount received per bribe. This can be done as follows:

Total amount made by officer=No. of weeks×No. of times per week×amount per bribe=52×2×1,000=104,000

Thus, the amount made by the officer through the bribing is $104,000.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (b):

To determine

The Bribe income.

Sub part (b):

Expert Solution
Check Mark

Explanation of Solution

The number of housing inspectors is 20. Each of them provides half of their bribe to the construction supervisor. The amount made by the housing inspectors annually is $104,000.

Thus, the amount that the construction supervisor received can be calculated as follows:

Amount made by construction supervisor=(Amount made by per housing inspector×No.of inspectors×Percentage that the inspectors gives )=104,000×20×0.5=1,040,000

Thus, the construction supervisor makes $1,040,000 per year.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (c):

To determine

The Bribe income.

Sub part (c):

Expert Solution
Check Mark

Explanation of Solution

The Number of housing inspectors decreases from 20 to 10. The amount of bribe increases to $2,500 from $1,000. There are 52 weeks, 2 house visits per week and the inspectors gives 50 percent of the bribe to the construction supervisor.

The amount that the inspector makes per year through bribing can be calculated as follows:

Total amount made by officer=No. of weeks×No. of times per week×amount per bribe=52×2×2,500=260,000

Thus, the amount made by the officer through the bribing is $260,000.

Thus, the amount that the construction supervisor received can be calculated as follows:

Amount made bt construction supervisor=(Amount made by per housing inspector×No.of inspectors×Percentage that the inspectors gives )=260,000×10×0.5=1,300,000

Thus, the construction supervisor makes $1,300,000 per year.

The amount received by the construction supervisor in part b was only $1,040,000. But, in this case, it is $1,300,000. The difference in the amount received by the supervisor can be calculated by subtracting the old amount from the new amount as follows:

Difference in amount received by supervisor=New amountold amount=1,300,0001,040,000=260,000

Thus, the construction supervisor will earn $260,000 more than in part b income.

Since, the amount received by the construction supervisor is increased even with the decline in the number of inspectors, the construction supervisor will be happier with it.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (d):

To determine

The Bribe income.

Sub part (d):

Expert Solution
Check Mark

Explanation of Solution

The number of housing inspectors decreases from 20 to 10. The amount of bribe increases to $1,500 from $1,000. There are 52 weeks, 2 house visits per week and the inspectors give 50 percent of the bribe to the construction supervisor.

The amount that the inspector makes per year through bribing can be calculated as follows:

Total amount made by officer=No. of weeks×No. of times per week×amount per bribe=52×2×1,500=156,000

Thus, the amount made by the officer through the bribing is $156,000.

Thus, the amount that the construction supervisor receives can be calculated as follows:

Amount made bt construction supervisor=(Amount made by per housing inspector×No.of inspectors×Percentage that the inspectors gives )=156,000×10×0.5=780,000

Thus, the construction supervisor makes $780,000 per year.

The amount received by the construction supervisor in part b was $1,040,000. But, in this case, it is only $780,000. The difference in the amount received by the supervisor can be calculated by subtracting the new amount from the previous amount as follows:

Difference in amount received by supervisor=old amountNew amount=1,040,000780,000=260,000

Thus, the construction supervisor will earn $260,000 less than in part b income.

Since the amount received by the construction supervisor is decreased with the decline in the number of inspectors, he will be unhappy.

Thus, he desires to use 20 housing inspectors again.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Not use ai please
Jim's Bank Account for the Year to 30 April 2008: We will start by calculating the balance of the business bank account, using the transactions provided. Opening Balance: Jim initially deposited €150,000 into his business bank account on 1 May 2007. Transactions: Receipts: Cash Sales (May 2007 to April 2008): €96,000 Credit Sales (Business customers): €19,600 (Note: This amount is not yet received as it is on credit, but it will be included in the Income Statement and not the bank balance at this stage.) Bank receipts from credit customers (amount owed at 30 April 2008): €6,800 Total Receipts:€96,000 (Cash Sales) + €6,800 (credit customer payments) = €102,800 Payments/Expenditures: Lease Payment (Paid in advance for five years): €50,000 Shop Fitting: €10,000 Assistant’s Wages: €250 per month × 12 months = €3,000 Telephone expenses: €800 Heat & Light expenses: €1,000 Jim’s withdrawals for personal expenditure: €1,000 × 12 months = €12,000 Accounting Fee (after the year-end):…
Solve the problem
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning