Suppose that the president proposes a new law aimed at reducing healthcare costs, All Americans are required to eat one apple daily.

How would the law affect the marginal product and the value of the marginal product of apple pickers?

Explain how a firm’s production function is related to its marginal product of labor, how a firm’s marginal product of labor is related to the value of its marginal product, and how a firm’s value of marginal product is related to its demand for labor.

A technological advance that increases the marginal product of labor shifts the labor- ______ curve to the ______. a. demand, left b. demand, right c. supply, left d. supply, right

Which of the following events will shift the labor supply curve to the right?

a. More dads leave the work force to spend time raising children.

b. Great new video games are introduced, enhancing the value of leisure.

c. Relaxed immigration laws allow more workers to come in from abroad.

d. Government benefits for the retired are increased.

Who has a greater opportunity cost of enjoying leisure-a janitor or a surgeon?

a. the janitor because his wage is lower

b. the surgeon because his wage is higher

c. whoever has the greater income effect

d. whoever has the greater substitution effect

Which of the following is true of the capital requirement?

A. The higher the percentage of assets a bank holds as loans, the higher the capital requirement.

B. Its intended goal is to protect the interests of those who hold equity in the bank.

C. It specifies a minimum leverage ratio for all banks.

A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $\$ 1,000$ per diamond and the demand for diamonds is described by the following schedule:

$$\begin{array}{rc} \text { Price } & \text { Quantity } \\ \hline \$ 8,000 & 5,000 \text { diamonds } \\ 7,000 & 6,000 \\ 6,000 & 7,000 \\ 5,000 & 8,000 \\ 4,000 & 9,000 \\ 3,000 & 10,000 \\ 2,000 & 11,000 \\ 1,000 & 12,000 \end{array}$$

If Russia and South Africa formed a cartel, what would be the price and quantity? If the countries split the market evenly, what would be South Africa's production and profit? What would happen to South Africa's profit if it increased its production by $1,000$ while Russia stuck to the cartel agreement?

This chapter discusses companies that are oligopolists in the markets for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the markets for the inputs they buy.

Baseball players went on strike in $1994$ because they would not accept the salary cap that the owners wanted to impose. If the owners were already colluding over salaries, why did they feel the need for a salary cap?

This book discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy.

Major league baseball team owners have an oligopoly in the market for baseball players. What is the owners’ goal regarding players’ salaries? Why is this goal difficult to achieve?

This book discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy.

If sellers who are oligopolists try to increase the price of goods they sell, what is the goal of buyers who are oligopolists?

Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies

Based on your understanding of the gains from trade do you think that these payoffs actually reflect a nation’s welfare under the four possible outcomes?

Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies

In 1993 the U.S. Congress ratified the North American Free Trade Agreement, in which the United States and Mexico agreed to reduce trade barriers simultaneously. Do the perceived payoffs shown here justify this approach to trade policy? Explain.

Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies

Define Nash equilibrium. What is the Nash equilibrium for trade policy?

Consider trade relations between the United States and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies

What is the dominant strategy for the United States? For Mexico? Explain.