[Related to the Apply the Concept on page 587] When the contact lens firm discussed in the Apply the Concept feature implemented a new compensation plan, who benefited from the change? Is it likely that there were any losers from the change? Briefly explain.

[Related to the Apply the Concept on page 578] A business columnist for the New York Times estimated that the wealth of J.K. Rowling, author of the Harry Potter novels, at $1.2 billion. The columnist observed, “Along with other famous authors, entertainers and sports stars, Ms. Rowling has also benefited from globalization and technology advances.” What technology advances is he likely referring to? Why would those advances increase Rowling’s wealth compared with the wealth of a similarly popular author of, say, the 1960s?

[Related to Solved Problem 17.1 on page 566] Fill in the missing values in the following table for Terrell’s Televisions.

Use the information in the table to draw a graph like Figure 17.1 on page 565 that shows the demand for labor by this firm. Be sure to indicate the profitmaximizing quantity of labor on your graph.

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.”

The authors estimate that the H-1B visa program resulted in a reduction of about 4 percent in the wages U.S. CS workers would otherwise have received. Does this conclusion allow you to determine whether the program had a greater effect on labor demand or on labor supply? Briefly explain.

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.

[Related to Solved Problem 17.1 on page 566] Fill in the missing values in the following table for Terrell’s Televisions.

From the information in the table, can you determine whether this firm is a price taker or a price maker? Briefly explain.

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.

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?

[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.

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.

A _____ demand curve for shampoo would be caused by a change in the price of shampoo.

A) rightward shift of the

B) leftward shift of the

C) movement along the

D) positively sloped

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 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?