Directions: Please answer each of the following questions, writing a paragraph for each.  Explain your thoughts with theory and examples where applicable.

1.      A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers.  Describe the effect of the flood on the marginal productivity of land, labor, and capital.  How would the flood affect the price of inputs?  Provide some examples.

2.      A recent study of the determinants of wages for clerical staff at a state university found that years of schooling, years of experience, age and job characteristics only explained about one-half of the difference in wages.  Describe other factors that may be important in explaining wages differences for clerical staff.

3.      After graduating from college, you receive job offers from five different accounting firms.  All job offers have a different compensation package.  Is it irrational for you to accept an offer that doesn’t provide the highest level of monetary compensation?  Use the concept of compensating differentials to explain your answer.

4.      List the productivity factors that may explain the differences in pay between men and women in similar occupations.  Do any of these factors arise as a result of cultural or social traditions?  If so, describe how changes in social relationships will affect the pay gap over time.

5.      Explain the role that consumers play in perpetuating discrimination in labor markets.

6.      Outline the possible work disincentives created by anti-poverty programs.  Is there a way to solve this problem without causing other forms of inefficiency to arise?  Explain your answer.

7.      What are the primary price inputs in the microeconomic market?

PART II

After watching Krugman’s video this week, do you concur with the assessment that growing income inequality threatens the middle class?  Identify a competing argument, paper, and theorist.  Who is the most qualified voice that dissents from Krugman’s thesis?  Write a two page position paper and cite at least two peer-reviewed sources.  Please utilize LIRN to help you get started with your search.  You may visit the Academic Resource Center for a guide on how to utilize LIRN successfully.

PART III: Reflection Essay

Write a one page paper on what you found most useful in this module.  What was the biggest take-away lesson you learned and how do you see firms applying the topic to decision making in a microeconomic methodology?