In the Immigration Act of 1990, Congress established the H-1B visa program, intended to allow U.S. firms to hire foreign workers in areas such as the physical sciences, computer programing, and engineering. John Bound and Nicolas Morales of the University of Michigan and Gaurav Khanna of the University of California, San Diego, studied the effects of the H-1B program on the market for computer science (CS) workers in the United States in the years from 1994 to 2001, during which the Internet first became important for the operations of U.S. firms. They found that the visa program may have had effects on labor demand in two ways: (1) if immigrant CS workers were responsible for innovations, such as improving the functioning of Web sites, that required more CS workers to be hired, and (2) if U.S. firms hiring immigrant CS workers reduced the likelihood that the firms would have hired foreign technology firms to carry out CS work. They noted, “If computer scientists are a sufficient spur to innovation, or if domestic employers can readily offshore CS work, any negative effects that an increase in the number of foreign CS workers might have on the domestic high-skill workforce would be offset by increases in the domestic demand for computer scientists.”

Draw a demand and supply graph of the market for CS workers in the United States to illustrate the authors’ argument. Be sure to indicate on your graph any effects of the H-1B visa program on the demand and supply curves.

Suppose that a large oil field is discovered in Michigan. By imposing a tax on the oil, the state government is able to eliminate the state income tax on wages. What is likely to be the effect on the labor supply curve in Michigan?

Through the 2016 season, Nick Saban’s record as the head football coach at the University of Alabama was 119 wins and 19 losses. The $11.125 million salary the university paid him in 2017 was the highest received by any college football coach. Yet ESPN commentator Scott Van Pelt argued, “Alabama is still getting a bargain in Nick Saban, and I guarantee you that they know that.” How could the University of Alabama be getting a bargain despite paying Saban such a high salary?

[Related to the Apply the Concept on page 587] For years, the Goodyear Tire & Rubber Company compensated its sales force by paying a salesperson a salary plus a bonus, based on the number of tires he or she sold. Eventually, Goodyear made two changes to this policy: (1) The basis for the bonus was changed from the quantity of tires sold to the revenue from the tires sold; and (2) salespeople were required to get approval from corporate headquarters in Akron, Ohio, before offering to sell tires to customers at reduced prices. Explain why these changes were likely to increase Goodyear’s profits.

[Related to the Don’t Let This Happen to You on page 578] Joe Morgan is a sportscaster and former baseball player. After he stated that he thought the salaries of Major League Baseball players were justified, a baseball fan wrote the following to Rob Neyer, a sports columnist:

Mr. Neyer,

What are your feelings about Joe Morgan’s comment that players are justified in being paid what they’re being paid? How is it ok for A-Rod [Alex Rodriguez, at the time a player on the New York Yankees] to earn $115,000 per GAME while my boss works 80 hour weeks and earns$30,000 per year?

How would you answer this fan’s questions?

Most labor economists believe that many adult males are on a vertical section of their labor supply curves. Use the concepts of income and substitution effects to explain under what circumstances an individual’s labor supply curve would be vertical.

WOW! Inc. declared a 5 percent stock dividend on its 500,000 shares of common stock. The $\$ 10$ par value common stock was originally sold for $\$ 12$ and was selling at $\$ 15$ at the time the stock dividend was declared. Prepare the general journal entries to record and distribute the stock dividend.

On April 20, Gallatin County Rocks Inc., a marble contractor, issued for cash 75,000 shares of $\$ 45$ par common stock at $\$ 54$, and on August 7 , it issued for cash 20,000 shares of preferred stock, $\$ 10$ par at $\$ 12$. a. Journalize the entries for April 20 and August 7.

Suppose Yummy Treats Bakery issues common stock in exchange for a building. Yummy Treats Bakery should record the building at a. the par value of the stock given. b. its book value. c. its market value. d. a value assigned by the board of directors.

Bankers usually insist that prospective business borrowers submit audited financial statements along with a loan application. Why should financial statements be audited by a CPA?

Which of the following statements is true? I. Marginal cost is the change in total cost generated by one additional unit of output. II. Marginal cost is the change in variable cost generated by one additional unit of output. Ill. The marginal cost curve must cross the minimum of the average total cost curve. A. I only B. II only C. III only D. I and II only E. I, II, and III

Frank Gunter owns an apple orchard. He employs 87 apple pickers and pays them each $8 per hour to pick apples, which he sells for$1.60 per box. If Frank is maximizing profit, what is the marginal revenue product of the last worker he hired? What is that worker’s marginal product?

[Related to the Apply the Concept on page 587] In most jobs, the harder you work, the more you earn. Some workers would rather work harder and earn more; others would rather work less hard, even though as a result they earn less. Suppose, though, that all workers at a company fall into the “work harder and earn more” group. Suppose also that the workers all have the same abilities. In these circumstances, would output per worker be the same under an hourly wage compensation system as under a piece-rate system? Briefly explain.

Sean Astin, who played the hobbit Sam in The Lord of the Rings movies, wrote the following about an earlier film he had appeared in: “Now I was in a movie I didn’t respect, making obscene amounts of money (five times what a teacher makes, and teachers do infinitely more important work).” Are salaries determined by the importance of the work being done? If not, what are salaries determined by?