1. Survival of the fittest: Minimum wage in the Restaurant Industry.In “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit”, Dara Lee Luca and Michael Luca write: We study the impact of the minimum wage on firm exit in the restaurant industry, exploiting recent changes in the minimum wage at the […]
1. Suppose there is a perfectly competitive industry where all the firms are identical with identical cost curves. Furthermore, suppose that a representative firm’s (short run) total cost is given by the equation TC = 100 + q^2+ 2q where q is the quantity of output produced by the firm. You also know that the […]
1. Suppose the yield on short-term government securities (perceived to be risk-free) is about 3%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 13.5%. According to the capital asset pricing model: a. What is the expected return on the market portfolio? b. What would […]
1. Suppose there are five people – 1, 2, 3, 4, and 5 – who rank projects A, B, C, and D as follows: 1 2 3 4 5 A A D C B D C B B C C B C D D B D A A A a. Sketch the preferences, as in […]
1. Suppose the government imposed a maximum wage in the market for some high-paying job. Draw a diagram to illustrate this market. What would be the consequences of this maximum wage? 2. Explain why, when we analyze the minimum wage, the elasticity of labor supply affects the unemployment rate but not the employment rate. […]
1-Suppose the marginal social cost of fighter aircraft each year exceeds their marginal social benefit Are fighter aircraft being produced at an efficient level? 2-The marginal social benefit of college enrollments currently exceeds its marginal social cost . Use a graph to demonstrate the gain in efficiency that would result from an increase in college […]
1. Suppose the government grants $2,500 per child to households that have more than two children. Do these child allowances influence the fertility behavior of households that had no children prior to the government program? 2. A worker plans to retire at the age of 65 when he will start collecting his retirement benefits. There […]
1. Suppose that you enter into a six-month forward contract on a non-dividend-paying stock when the stock price is $30 and the risk-free interest rate (with continuous compounding) is 12% per annum. What is the forward price? 2. A stock index currently stands at 350. The risk-free interest rate is 8% per annum (with continuous […]
1. Suppose that we disallowed recursion in Ada. Would it be possible to construct a fully static environment for the language? Is the same true for C? 2. Describe how, in a language without procedure parameters, the environment pointer of a procedure closure does not need to be stored with the procedure, but can be […]
1. Suppose that the skills acquired in school depreciate over time, perhaps because technological change makes the things we learned in school obsolete. What happens to a worker's optimal amount of schooling if the rate of depreciation increases? 2. Suppose that workers differ in their ability, but have the same rate of discount. Is it […]
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