2. Essays (Select and answer three of the following five essay questions) The Ge

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Essays (Select and answer three of the following five essay questions)

The General Agreement on Tariffs and Trade (GATT) is legislation that substantially increased tariffs in the early 1930s. legislation that substantially lowered tariffs in the early 1930s. an organization established after World War II to set the rules for international trade and reduce trade barriers among member nations. an organization established in the early 1960s to protect U.S. industries from low-cost foreign producers. Essays (Select and answer three of the following five essay questions) if economics is correct in its assumption that people are rational, why then would anyone choose to smoke cigarettes? Suppose the United Auto Workers union obtains a substantial wage increase for auto workers. How will this affect the market for automobiles? If the demand for pizza falls, pizza suppliers will suffer economic losses, and some firms will leave the industry. Why is this considered good? Shouldn't we feel sorry for these business owners? Cattle manure is an input often used in making fertilizer. Suppose a technique is discovered that can transform cattle manure into quality gasoline. What would happen in the fertilizer industry? Ethyl does not like redheads and refuses to hire any at her business. Paul was the perfect job candidate on paper, but the personal interview revealed that he was a redhead. Are there any costs to Ethyl for not hiring Paul?

Explanation / Answer

1)

B) legislation that substantially lowered tariffs in the early 1930s.

2

ANS:People would choose to smoke cigarettes not because they are irrational but because of the addictive chemicals inside them. You are correct in thinking that they would be irrational to start smoking because applying a cost benefit analysis, the costs (mainly to health) outweigh the benefits (social smoking to fit into a crowd). However, this all depends on the persons UTILITY FUNCTION. Some people start smoking because the benefits from smoking (to enter a new social group for example) outweigh the costs to health. Although this can be viewed as irrational by others, the individual is maximizing their utility and is therefore technically rational.

This is from an economic point of view, but from a more logical point of view it's the addictive chemicals inside them that keep them smoking.

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ANS : Economics suggests that this type of discrimination has a cost. In this case, Ethyl does not get the best person for the job. It is likely that her second choice will not be as productive. Also, Paul could end up working for one of Ethyl's competitors. Thus, the competition has improved its position, relative to Ethyl's business.

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