The government decides to tax cookbooks because they feel that they encourage overeating and can lead to health issues, such as obesity and heart disease. Answer the following:
- What type of tax is this? Explain.
- What happens to the supply of cookbooks?
- Who pays the tax at the end?
- Is this a good way to finance programs to improve health?
- What other types of tax can the government use to increase revenues?
Justcookbooks.com becomes wildly successful in the United States, and you decide to export overseas. Answer the following:
- Does this reflect an absolute or a comparative advantage?
- Name some issues that you will encounter as you become a multinational corporation.
In the article entitled “The Economic Effects of Labor Unions Revisited,” Vedder and Galloway attempt to prove statistically, using historical data, that labor unions do not have a good effect on the economy. Read the article, and explain the following microeconomic concepts that the authors discuss and how they are related to unions:
- Demand, supply, and equilibrium wage rates of labor
- Real GDP and economic growth
- Income per capita
- Population growth and aging
- The article focuses on harmful economic effects, but also mentions some positive aspects. What are they?