Final 2005 - Spring 2005 Name: _ Principles of...

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

View Full Document Right Arrow Icon
Spring 2005 Name: _________________________ 1/9 Principles of Macroeconomics Final Exam You’ll have two hours to complete this exam. There are six questions. Each is worth a different number of points, so be sure to budget your time effectively. Also be sure to label all your curves and axes. If you have any questions during the course of the exam, please feel free to ask me. Good luck! 1) In their November 23, 2003 Los Angeles Times article, Abigail Goldman and Nancy Cleeland discuss the mixed blessings Wal-Mart has bestowed on the American economy. Wal-Mart is the world’s largest corporation and is by far the nation’s largest retailer. According to Goldman and Cleeland, it posts twice the sales of General Electric and eight times the sales of Microsoft. However, the giant firm is often criticized for its labor practices. In answering parts A and B of this question, suppose that California’s state legislature is considering enacting legislation that would limit Wal-Mart’s expansion in California. A) Senator Burgundy (R-Modesto) has defended Wal-Mart by arguing that, other things being equal, the entry of a new firm into the labor market should increase, not decrease, the equilibrium wage and the equilibrium number of Californians employed. In the senator’s own words, “Wal-Mart not only means low prices for our constituents. It also means more jobs and higher wages.” Use a labor supply and demand diagram to either support or refute the senator’s claims. You should also include a brief explanation of your answer. [5 points]
Background image of page 1

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

View Full DocumentRight Arrow Icon
B) Senator Indigo (D-Berkeley), on the other hand, claims that Wal-Mart is a “category killer” (i.e., a firm whose low prices drive all competing firms in a retail category out of business). Indigo points out that while there used to be dozens of toy store chains in the U.S., Wal-Mart has driven most into bankruptcy. “Contrary to what my conservative colleague will tell you, Wal-Mart means fewer employers, and therefore fewer jobs at lower wages. Always low wages, always. There are no two ways about it.” Use a labor supply and demand diagram to either support or refute this senator’s claim that the entry of a category killer like Wal-Mart into a labor market will unambiguously lead to lower wages. [5 points]
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 05/13/2010 for the course ECON 323 taught by Professor Jakes during the Spring '10 term at Alcorn State.

Page1 / 9

Final 2005 - Spring 2005 Name: _ Principles of...

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