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Microeconomics Question from Walter E. Williams:Edit

"Give brief (a sentence or two) comments to the following:

  • (a) Demand curves tend to be more elastic in the long run than in the short run.
  • (b) Men (persons) do not differ significantly from roaches.
  • (c) Unemployment means that there are not enough jobs to go around.
  • (d) The tendency for mechanics to charge women higher prices for a given emergency repair than that charged men."

Answer:Edit

  • (a) This part is the same as WEW-022
  • (b) Men (persons) maximize utility subject to constraints, so do cockroaches. Observe a cockroach taking the shortest path between two points (by running across the kitchen floor).
  • (c) Unemployment simply means that people are holding out for higher wages than they are currently receiving. There is some price at which all people would be employed.
    • People can be in between jobs -- there are search costs for new jobs including forgone employment
    • Leisure has a higher opportunity cost -- it is utility improving not to work
    • Government regulation (minimum wages laws, for example) -- prevent people from taking jobs they would otherwise be happy to take.
  • (d) Women may view themselves as having fewer or more costly alternative choices than do men, which makes their demand curve for auto repairs more inelastic. Mechanics therefore price discriminate. A man might be able to walk, fix the car himself, or know of another mechanic. A woman (assuming this stereotype) is less likely to substitute in these other options, and therefore does not compete on price. (NOTE: I have known women to get their cars worked on by simply showing up with fresh baked cookies, so it cuts both ways.)

Other QuestionsEdit

Next: WEW-030
Previous: WEW-028

WEW Questions 21-40
WEW-021WEW-022WEW-023WEW-024WEW-025WEW-026WEW-027WEW-028WEW-029WEW-030
WEW-031WEW-032WEW-033WEW-034WEW-035WEW-036WEW-037WEW-038WEW-039WEW-040

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