1- Even without a minimum wage, the unemployment rate would almost surely be higher among teenagers than among adults. What aspects of economic theory would lead to this outcome?
2- Consider two situations. In one you find yourself in the 90% income tax bracket and in another you are in the 10% income tax bracket. Would your incentive to find loopholes to reduce your tax liabilities be the same or different in these two situations given that your income is the same in both cases? Explain your answer. Does this have anything to do with the Laffer Curve?
3- In most cities in the world, it is necessary to purchase an expensive license – called a medallion that have fixed number in supply – to operate a taxi. These medallions allow you to do your business and if you wish you can sell them and leave the taxi business. Would you expect the resale price of those medallions to rise of fall in the future? Why?
4-Suppose there is a decline in the marginal costs for one member of a cartel. What impact will this have on the incentive of that firm to cheat on the cartel agreement? What impact will it have for the stability of that cartel? Explain
