ECON 429 Lecture Notes - Lecture 28: Factor Endowment, Demand Shock

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crimsonwalrus133

4 Jul 2016

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The effect of immigration on the u. s. economy. There is a very broad literature assessing the effect of immigration on the host country. We will look at the effect of immigrants on: wages, prices, public coffers. This is a hotly debated topic, for two reasons: recent immigration is largely unskilled. Therefore, it may lower the wage of unskilled native workers. This effect will be larger: (a) the larger the immigration level; (b) the higher the substitutability between foreign-born and native unskilled workers (c) the lower the integration of the labor market (with perfect integration law of one price applies). At the same time, highly skilled natives would benefit through 1) higher wages (their skills become more valuable because of immigration) and: lower prices (of goods produced and services offered by immigrants). The effect of migration on wages depends on the assumptions about the economy. For example, the above predictions are valid in a close economy.

Related Questions

Microeconomics Multiple choice questions. Please answer all the questions.

1. Scarcity:
A. exists because resources are limited while human wants are unlimited.
B. means we are unable to have as much as we would like to have.
C. will likely be eliminated as technology continues to expand.
D. is not an issue addressed in economics.

2. People are forced to make choices because of:
A. unlimited wants and unlimited resources.
B. limited wants and unlimited resources.
C. unlimited wants and limited resources.
D. limited wants and limited resources.
E. irrational wants and limited resources.

3. Which of the following is closest to the definition of capital?
A. c and e.
B. c and d.
C. Tools, equipment, means of transportation
D. Factories and machinery.
E. Borrowed money.

4. Which one of the following is the most accurate definition of economics?
A. Economics is the study of stocks and bonds.
B. Economics is the study of how people allocate unlimited resources.
C. Economics is the study of how consumers choose to spend their income.
D. Economics is the study of how society chooses to allocate scarce resources.

5. The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade.
B. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms.
C. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

6. Which of the following is not a resource?
A. Land.
B. Labor.
C. Money.
D. Capital.

7. Which of the following would an economist classify as capital?
A. 100 shares of Microsoft stock.
B. $50 bill.
C. credit card.
D. lawyer's personal computer.

8. Economics, according to its definition, studies how people:
A. earn and spend money.
B. invest in the stock and bond markets.
C. make choices in the face of scarcity.
D. supply goods in response to demand.

9. Which of the following is the best example of a microeconomic topic?
A. The impact that the money supply has on inflation.
B. The reasons for increases in the price of soft drinks.
C. The effect that federal budget deficits have on the interest rate.
D. The tradeoff between inflation and unemployment.

10. Which of the following is a macroeconomics topic?
A. Wages of textile workers in the Northeast.
B. The cost of producing 10,000 bookcases.
C. The economy's annual growth rate.
D. National demand for fish.
E. Effects of farm subsidies on food prices.

11. An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:
A. other relevant factors like consumer incomes must be held constant.
B. the gasoline prices must first be adjusted for inflation.
C. the theory is widely accepted but cannot be accurately tested.
D. consumers' need for gasoline remains the same regardless of the price.

12. An economic model is:
A. a plastic scaled version of the economy.
B. a complete depiction of reality.
C. an abstraction from reality.
D. applicable to consumer behavior but not to producer behavior.
E. not an accepted tool of the economics profession.

13. Which of the following sayings best reflects the concept of opportunity cost?
A. "You can't teach an old dog new tricks."
B. "There is no such thing as a free lunch."
C. "I have a baker's dozen."
D. "There's no business like show business."

14. The opportunity cost of watching television is:
A. all of the alternative programs that appear on other stations.
B. zero because there is no money expenditure involved.
C. the alternative use of the time foregone by watching the program.
D. zero if it benefits you.

15. Which of the following does not illustrate opportunity cost?
A. If I study, I must give up going to the football game.
B. If I buy a computer, I must do without a 35" television.
C. More consumer spending now means more spending in the future.
D. If I spend more on clothes, I must spend less on food.

16. When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:
A. benefits expected from two cars with the cost of both.
B. additional benefits expected from a second car with the cost of the two cars.
C. dollar cost of the two cars with the potential income that the cars will generate.
D. additional benefits of the second car with the additional cost of the second car.

17. According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study:
A. is positive.
B. outweighs the extra cost.
C. exceeds the benefits of the previous hour of study.
D. will raise your exam score.

Consider the following excerpts:

Excerpt 1:

Saudi Arabia is ramping up efforts to lure international companies and revive Crown Prince Mohammed bin Salman's plans for an economic makeover after foreign investment fell to a 14-year-low in 2017.

The moves include plans to create two investment funds totalling over $18 billion for the government to enter into ventures with foreign companies, said people familiar with the matter. The kingdom is also pouring billions into entertainment-industry partnerships and working with SoftBank Group's Vision Fund to bring technology firms to Saudi Arabia.

The first modern Saudi bankruptcy law is due to soon come into effect. The government has also drawn up a law on public-private partnerships, the first step toward the sale of billions of dollars in state-owned assets that the government hopes will attract foreign investment in big infrastructure projects.

Prince Mohammed is trying to shift the economy away from oil and toward industries that provide growth and jobs for Saudis. The first steps toward economic reform included cutting subsidies and adding taxes to narrow the budget deficit.

He has introduced social reforms such as allowing women to drive and opening cinemas. He has also forged an alliance with the Trump administration and shifted the kingdom into a more firm posture against Iran. But some of his economic plans have so far stalled.

The Saudi economy contracted last year, largely as a result of lower oil prices, and only emerged from recession in the first quarter of this year. The prospect of years of low oil prices helped spark Prince Mohammed's calls for economic reform, though prices have rallied in recent months.

Also worrying some investors was the detention of Saudi business leaders last fall in what the kingdom said was an anticorruption crackdown. The charges weren't aired publicly and some businessmen remain jailed; the government has moved to collect over

Saudi officials have said the crackdown should assure investors that the kingdom is serious about securing a stable rule of law, and the crown prince sought to win more American business on a nearly three-week visit to the U.S. this spring.

Excerpt 2:

Saudi Arabia's premier business conference opened as scheduled Tuesday, missing the star power of Western executives who cancelled over a Saudi journalist's death but packing a surprise: an unexpected visit from Crown Prince Mohammed bin Salman.

The event, the Future Investment Initiative, once again served as a forum for promoting Saudi investment and Prince Mohammed's modernization plans. But the gathering was stripped down from last year's inaugural session as the kingdom wrestled with corporate and diplomatic fallout in the wake of allegations that the Saudi government was involved in Jamal Khashoggi's Oct. 2 death in the Saudi consulate in Istanbul.

"Everybody is talking about it," said Henry Fernandez, chief executive of MSCI Inc., a U.S.-based markets-index compiler, speaking of Mr. Khashoggi's death. Despite that, he said the conference remained focused on engagement [with Saudi Arabia], not divestment...

The reaction to Mr. Khashoggi's death threatens to derail Prince Mohammed's plan to re-engineer the kingdom's economy to make it less reliant on oil income. The event is the prince's most visible effort to attract international investments by presenting the country as a business-friendly place that embraces new technologies

The event drew more than 3,000 investors, business leaders and advisers, according to the event app, but attendees also estimated hundreds had withdrawn. Many Western dropouts were replaced by representatives from Russia, Asia and the Arab world.

Among those who remained, French oil giant Total SA's CEO, Patrick Pouyanne, showed up alongside regional investment bank heads. Lucid Motors Inc., a California-based electric vehicle maker in which Saudi Arabia has committed to invest $1 billion, showcased the only prototype of its planned first car in the hotel's lobby.

Shahid Kazi, chief executive of Dubai-based consultancy ValuStrat, said Western executives who cancelled may have put a dampener [on the event] and may have disappointed people. But I wouldn't say it [the event] isn't useful. The Saudis are all here. That's who we really want to meet.

Still, there were signs that the gathering was off to an inauspicious start.

Last year, Western attendees arriving here were whisked to a luxurious airport lounge serving Arab coffee and dates. On Monday night, they lined up for passport control like everyone else.

The conference's website appeared to be hacked and was unavailable for hours Monday. Meantime, the World Economic Forum, which runs the eponymous event in the Swiss resort of Davos each year, formally objected to the gathering's nickname, Davos in the Desert.

Investors have divested more than $720 million from the Saudi stock market since Mr. Khashoggi's disappearance. The stock market, known as the Tadawul, is down about 4% since then.

What motives might drive technology and entertainment companies to invest in Saudi Arabia?

What are the risks associated with FDI in Saudi Arabia?

Why is the Saudi government so active (reform, conferences, risk-sharing) in bringing FDI back to Saudi Arabia?

purpletoad352

Read this Wall Street Journal article "Artifact Prices Draw Looters" and answer the questions below.

1. Does an increase in the demand for Indian artifacts cause an increase in the quantity supplied of these artifacts?

2. Does an increase in the unemployment rate result in an increase in the supply (i.e., a shift in the supply curve to the right) of Indian artifacts? Discuss the opportunity cost of time.

3. What is the effect of an increase in both the demand and supply of Indian artifacts in the equilibrium prices and quantities?

U.S. News: Artifact Prices Draw Looters --- Despite Crackdown, Thefts of Indian Antiquities Continue West of the Rockies

Author: Scheck, Justin

Publication info: Wall Street Journal [New York, N.Y] 02 Nov 2012: A.3.

ProQuest document link

Abstract: Over three months this summer, a group of rock climbers in this tiny Sierra Nevada outpost saw a man digging up what appeared to be Indian artifacts on remote federal land. Martin McAllister, a Montana archaeologist who has been performing damage assessments of looting sites for state and federal agencies for over a decade, said he believes looting is up.

Links: Linking Service

Full Text: HOPE VALLEY, Calif. Over three months this summer, a group of rock climbers in this tiny Sierra Nevada outpost saw a man digging up what appeared to be Indian artifacts on remote federal land. On several occasions, they confronted the man, and once chased him into the woods. "We said, 'Hey, dude, what you're doing is disrupting nature,'" recalled one of the climbers, Brad Perry. The climbers said they left messages at U.S. Forest Service offices. Agents later found the alleged digger, whom they declined to identify. The man acknowledged taking artifacts, including stone tools, said Rita Ayers-Vollmer, a Forest Service spokeswoman. The investigation is continuing and no charges have been filed, she said. Across the West, authorities are struggling to stop the looting of Indian antiquities. The thefts have continued despite a 2009 federal crackdown that resulted in more than 20 people being indicted in Utah. The case generated headlines due to a large number of charges, as well as the suicides of two defendants and a third man who reportedly was an informant in the case. Steep prices for artifacts and high rural unemployment have made digging for antiquities a popular pastime in places like eastern California, Nevada, and Utah, where deserts have preserved painted pots for thousands of years. Figures on artifact thefts are sketchy, said Todd Swain, a National Park Service investigator who specializes in looting cases. Most incidents never get reported. Federal agencies in the West often have only one or two criminal investigators to cover areas approaching a million square miles. In 2010, the last year for which data are available, the National Park Service tallied about 400 instances of artifact-looting in its parks nationwide, up from fewer than 300 in 2009, Mr. Swain said. The Forest Service in 2010 tallied about 50 incidents, down from about 150 the year before. Mr. Swain said the number of reported incidents can vary widely from year to year, and he estimated that as few as 20% of such thefts are reported. Martin McAllister, a Montana archaeologist who has been performing damage assessments of looting sites for state and federal agencies for over a decade, said he believes looting is up. His business is at an all-time high. "It's worse now than it ever was because the economy is depressed," he said. The looting troubles tribal members, who generally say that Indian artifacts should remain where they are. "This is our identity," said Darrel Cruz, cultural-resources director for the Washoe Tribe of Nevada and California. Mr. Cruz grew up a few miles from the Hope Valley site where the climbers found the man taking artifacts. In recent years, his tribe has encountered disturbed graves and stolen petroglyphs, he said. The Hope Valley site was the fourth looting instance Mr. Cruz has seen this year, up from two last year and the largest in his five years as cultural-resources director. Demand for Indian artifacts is strong, experts said. "The market is really incredible," said Terry Baxter, a California dealer who specializes in Western arrowheads, with some buyers paying $10,000 or more for rare ones, though most others sell for far less. Mr. Baxter and other dealers said they are careful not to sell artifacts from federal land and that they refuse questionable items. Mr. Baxter said he turned away a man earlier this year who was trying to sell an Indian skull. Missouri dealer Steve Lee said he declines one or two emailed offers a week to sell him Western arrowheads, out of concern they came from public land. Unlike Mr. Baxter, Mr. Lee said his business, which largely consists of artifacts from east of the Rockies, remains slow. But online outlets that specialize in artifacts make it easy to sell just about anything, creating an incentive to dig. Eric Keefer, an agent with the Bureau of Land Management near Bishop, Calif., said he receives about 10 looting reports a year. A couple of years ago, Mr. Keefer said, he helped investigate human remains that may have been dug up from a grave where other items were taken. One recent case from Mr. Keefer's area involved a man named Norman Starks. Mr. Starks, who is retired, said he likes to take walks around the desert in Lone Pine, Calif., and that he occasionally finds artifacts. "I've been collecting them since I was five or six years old," he said. Mr. Starks said he never digs for them. But in 2003, a federal agent found Mr. Starks digging around Indian graves, Mr. Keefer said. In 2005, the agent again found him digging, Mr. Keefer said. In 2009, Indians reported Mr. Starks was seen trying to unearth artifacts. Mr. Starks said the federal and tribal officials are "liars," a charge they deny. In 2010, a federal archaeologist said he found Mr. Starks digging near an Indian grave on land owned by the Los Angeles Department of Water and Power, Mr. Keefer said. He was tried in California state court for disturbing artifacts. The jury couldn't reach a verdict, and Mr. Starks agreed in a settlement to stay off certain lands. Subscribe to WSJ: Credit: By Justin Scheck

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ECON 429 Lecture Notes - Lecture 28: Factor Endowment, Demand Shock

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