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Social Security Affect People's Incentive To Work

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Luigi Vittatoe Professor Melvin Landry EEC2304 Introduction to Microeconomics January 13, 2015 Homework #1 Chapter 1 6a) How does the provision of Social Security affect people’s incentive to save while working? People don’t worry about their future earnings and save since their government provides for them and will save much less. 6b) How does the reduction in benefits associated with higher earnings affect people’s incentive to work past age 65? They will work less if at all past 65 8a) Regulating cable TV prices shows the government’s concern about efficiency. The market failure involved is due to market power where small group of persons or a single person unduly influences market prices. 8b) Providing vouchers to some poor people to …show more content…

The shape is bowed outward showing the opportunity cost of clean environment is highest when the economy is producing less industrial output and maximum clean environment where the frontier is steep. When the economy is producing high quantity of industrial output and less clean environments the frontier is flatter as the opportunity cost of clean environment is lower. This advance of technology in electricity production expands society’s set of opportunities. The industrial output stays the same, but the rest of production frontier shifts outward. This shows that the economy enjoys more quantity of clean environment with increase in the industrial …show more content…

Scotland will still gain from trade because they have comparative advantage with an opportunity cost of 40 scones which is less than the opportunity cost of 50 scones per sweater for England. 9a) True. The gains from trade are dependent on the comparative advantages in production of goods. Even if one country has the absolute advantage in the production of all goods and they achieve gains from the trade. 9b) False. It is impossible for one person to have comparative advantage in everything they do because the opportunity cost of production varies. 9c) True. If a certain trade is good for one person it can’t be good for the other because when one person has comparative advantage in one good and the same as the opportunity cost. 9d) False. If trade is good for a country it is not good for everyone in the country. It makes some individuals worse off through imports as it makes the country as a whole better off. 9e) False. Trade makes optimum allocation of resources based on opportunity cost and comparative advantage. Through trade customers will receive goods or services at a lower price. The inefficient producer will have to exit the market so trade cannot be good for

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