Exam#1 Essays - Romana S Hai ECON 002 Essay Exam 1 Essays Submitted 1 Self-Interested Economic Behavior 3 Price Controls The Minimum Wage Law

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Romana S. Hai ECON 002 Essay Exam 1 (February 16, 2007) Essays Submitted: 1. Self-Interested Economic Behavior 3. Price Controls - The Minimum Wage Law Controversy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1. Self-interested economic behavior Bedrock Gadgets, reacting to ever more intense competition, and shrinking profits, cuts wages of production workers from $10 per hour to $8 per hour. 1a. Explain why Bedrock Gadgets believes that lower wages may lead to higher profits. Bedrock Gadgets believes that lower wages may lead to higher profits because, with lower wages, the extra dollars that would have gone to pay employees can now be looked upon as profit. Bedrock Gadgets can now save two dollars every hours an employee works, which allows them to consider that a profit. 1b. Explain why imposition of lower wages may lead to conflict with its own work force and why this conflict may frustrate the firm’s desire for higher profits. Lowering wages may cause tension in the work force; this can potentially lead to employees quitting their jobs at Bedrock Gadgets. If employees quit, this decreases the amount of staff available to Bedrock Gadgets. Not enough staff leads to cuts in production, which then leads to shrinking profits, and will conflict with the firm’s desire
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/17/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Fall '08 term at Pennsylvania State University, University Park.

Page1 / 5

Exam#1 Essays - Romana S Hai ECON 002 Essay Exam 1 Essays Submitted 1 Self-Interested Economic Behavior 3 Price Controls The Minimum Wage Law

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online