EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 17, Problem 5SP
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Ten years ago, the town of Easton decided to increase its annual spending on education so that its high school graduates would be able to earn higher wages. Now Easton has asked you to evaluate the effectiveness of the spending increase. Their data show that before the spending increase, the average annual salary of recent high school graduates was $25,000 and that now that average salary has risen to $28,500. Fortunately for your analysis, a neighboring community (Allentown) did not change its annual spending on education. Ten years ago, recent Allentown high school graduates earned an average of $22,500, and now that average is $23,750.
(a) Use a difference-in-differences estimator to determine whether Easton’s spending increase caused the wages of their high school graduates to increase.
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The extract above briefly highlight the digital age that is upon us, and as such companies have to adjust to participate in the global and digital markets. Using relevant examples, critically discuss how…
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Chapter 17 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $104 for the suit: Store Travel Time Each Way Price of a Suit (Minutes) (Dollars per suit) Local Department Store 15 104 Across Town 30 87 Neighboring City 60 80 Juanita makes $36 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $36 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by computing the opportunity cost of Juanita's time and the total…arrow_forwardYou have decided to start a snow-plowing business whereby you will offer to plow the driveways of your neighbours' homes after heavy snowfalls. You are well known by everybody in your neighbourhood, you have a plow for the front of your truck, and you think that your neighbours would rather hire you than someone they do not know. From your research, you know that homeowners are charged an average of $40 to plow their driveways after a heavy snowfall. Interestingly, a few years ago, your research tells you that homeowners were charged an average of $25 to plow their driveways after a heavy snowfall. The average price has gone up, which excites you. Apply your learning about supply and demand to this fact pattern to analyze possible reasons for the increase in price. Consider the five factors that may impact demand and the 6 factors that may impact supply. What questions do you want answered before committing to this business?arrow_forwardIf your overall grade point average is 2.0 and you earn a 2.5 GPA this semester, your overall grade point average will increase. This situation demonstrates the general principle that if average value is greater than marginal value, marginal value will increase. if average value is greater than total value, total value will increase. if marginal value is greater than average value, average value will increase. if marginal value is greater than total value, total value will increase.arrow_forward
- U.S. food markets consumers viewed beef as a normal good from 1960-1976, but viewed it as an inferior good after that point. This type of change is not abnormal, in that as average household incomes rise, preferences might change. For instance, as households move from poor to middle-class, their consumption of beef might increase. However, as households move from middle- class to upper-middle-class, they might choose to purchase more exotic foods products. Assuming you are a beef producer in 1983, what will happen if incomes continue to increase? a. The marginal cost of beef will increase. b. The marginal cost of beef will decrease. c. The demand for beef will increase. d. The demand for beef will decrease.arrow_forwardYou own a printing firm. Two of your senior managers provided you with advice. The first manager states that your company is losing money for every unit that is printed. To minimize losses, she advises that you reduce your production levels. The second manager states that if your firm sells some more units, the price will cover your increase in costs. In order to reduce losses, the second manager recommends that you should increase production. Explain which manager is correct and who is offering the correct advicearrow_forwardThe onset of the COVID-19 pandemic forced many companies to conduct business remotely rather than in office buildings. In many cases, these companies found it more cost-effective to remain working remotely after the pandemic. Fees for building rentals, electricity, and other expenses are not present when employees work from their homes. One challenge faced by this change in business practice is communication. Employees can no longer walk across the hall, or peek over their cubicle walls, to ask for clarification from their coworker about an issue. More Sunny Day Technology took advantage of this situation to develop and market new computer software to help corporations develop effective communication between virtual employees. Use the knowledge you’ve gained in this and previous Units to answer the following questions. Support your response by providing examples and details. How can More Sunny Day Technology Company market the right price for its new product? How can you comprehend…arrow_forward
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