Practice Questions Chapter 1 1. People respond to incentives ...

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. Show the impact of this event on the market for Brazilian farm workersin Exhibit 3. What has happened to the marginal product of farm labourand the wage of farm labour?Exhibit 34. Describe the impact of the following events on the market for carworkers in Swindon, England. (Note that Honda operates a factory inSwindon.)a. Honda expands its factory in Swindon.b. Which? magazine declares Honda to be the best-made cars in itsclass.c. Migrants with manufacturing skills from Poland and Romania relocateto Swindon.Practice Questions to accompany Mankiw & Taylor: Economics 48
Chapter 191. Within each of the following pairs of workers, which worker is likely toearn more and why? (It may be obvious which one is paid more. Thereal issue is to explain why one is paid more than the other.)a. A carpenter working at the top of a 600-foot cooling tower of a nuclearpower plant or a carpenter who frames houses?b. A shop assistant in a supermarket store or a lawyer?c. A lawyer with one year of experience or a lawyer with six years ofexperience?d. A worker in a car factory who works the day shift or a worker in a carfactory who works the night shift?e. An economics professor or a corporate economist?f. A history professor or an economics professor?g. Someone trained as a key-punch operator (typist who types inputcommands on cards to be read by a mainframe computer prior to theexistence of computer terminals) or someone trained as a personalcomputer specialist?h. Your favourite local blues band that plays regularly at a nearby campusbar or David Bowie?i. A lazy, stupid plumber or a hardworking, bright plumber?j. The best carpenter on the planet or the best writer on the planet?2. a. Explain the human capital view of education and the signalling view ofeducation.b. What are the implications for education policy under each view?c. Which of the above is true? Explain.3. a. How can a competitive market eliminate discrimination in the labourmarket?b. What limits a competitive market's ability to reduce discrimination?Explain.Practice Questions to accompany Mankiw & Taylor: Economics 49
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