Category: Economics

➤ Can the young adjust consumption today if they can borrow against the higher future income?
Yes. With access to credit or bond markets the young can pledge the higher expected w_o,t+1 and raise c_y,t today. The exact change depends on the interest rate and β. Typically lifetime wealth rises, so both periods’ consumption can increase; borrowing allows substitution toward current consumption if preferred.

TexChem is a chemical company in Wonderland. Its chemical production line is operated through two shifts: day and night shifts. The employees in the day shift work from 9 am to 5 pm and the employees in the night shift work from 8 pm to 4 am . TexChern generally pays the employees on the night shift about 20 percent more than the employees on the day shift. This is because the people in the Wonderland area generally do not like working during the night time due to its unpleasunt nature (less opportunity to spend time with family, health issues related to not sleeping well during the night time, a more dingerous commening enwironment at night, etc. Therefore, it is very difficult for TexChem to find workers for the night shift without this 20 percent wage premium. The 20 percent wage promium in this example can be explained using the concept ofq,efficiency wageproductivity effectinstitutionaliztioncompensating wage differentials

As with current university pricing schemes, proponents of full-cost pricing generally argue for a standard fee (albeit higher than at present) for all students. Standard-fee proposals ignore relative cost and demand differences among activities in the university.
Discuss several possible rationales for charging different prices for different courses of study.
What are the income-distribution effects of a pricing scheme that charges the same fee to all students?
If universities adopted a system of full-cost (or marginal cost) pricing for various courses, what would you expect the impact on the efficiency of resource allocations within the university to be?
Would you complain less about large lecture sections taught by graduate students if these were priced significantly lower than small seminars taught by outstanding scholars?
What problems could you see arising from a university that adopted such a pricing scheme?

4Let’s assume that you have read an announcement from TAMUCT today. It says in the announcement that TAMUCT will provide a JD degree scholarship that covers all the tuition- and study-related expenses plus the stipend of $200,000 per year (throughout the period of JD program) to a student who pursues JD degree after his or her graduation from TAMUCT. The only restriction is that the student applying for this scholarship needs to be admitted to the top 10 law schools in the US by the end of this semester. Although you are smart, and the scholarship is financially lucrative, you are not motivated to apply for this scholarship because you believe it is impossible to prepare for the law school exam and receive an admission from one of the top 10 law schools in the U.S. by the end of this semester (less than a month left). This is a good example of lacking motivation when the level of q, is low.identityexpectancyInstrumentalityvalence

1.
United States is at full employment. When the Fed cuts the quantity of money, other things remaining the same, explain the effect of the cut in the quantity of money on aggregate demand in the short run.
A. decreases the quantity of real GDP demanded but aggregate demand does not change
B. increases the quantity of real GDP demanded but aggregate demand does not change
C. increases aggregate demand
D. decreases aggregate demand

The Moloto Road is a major transport route that links Pretoria and Mpumalanga province. The road has been in a poor condition for many years, with numerous accidents occurring as a result of potholes and other hazards. However, in 2020, the South African government announced a major investment of R4.5 billion to upgrade the road, including widening it to four lanes and improving safety features such as lighting and fencing. The upgraded Moloto Road is expected to improve transport links between Pretoria and Mpumalanga, which will in turn promote economic growth in the rural areas along the route. This is because businesses will have better access to markets, while people will have better access to services and job opportunities.
1.1. How is the upgraded Moloto Road expected to promote economic growth in the rural areas along its route? Provide at least three specific examples of how businesses and people in these areas will benefit (25)

➤ Why does Susannah’s marginal benefit matter in this conflict?
Susannah’s marginal benefit ($15) measures how much she values a scent-free environment. It exceeds Yuri’s gain from wearing after-shave, creating a negative externality. That gap explains why an efficient outcome may require rules, compensation, or bargaining to align private incentives with social welfare.