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Chapter 1: Part (a) (page 4)

Why do you suppose that economists sometimes disagree about whether to classify freelancers who provide paid consulting services to businesses as "workers" or "firms"?

Short Answer

Expert verified

They sometimes disagree to classify because a freelancer may be working for one firm for a period of time and then, for another firm for a different period of time.

Step by step solution

01

Step 1. Definition of Economics.

Economics is the study of wants. The wants can be fulfilled by using scarce resources with alternative uses.

02

Step 2. Freelancers.

They sometimes disagree to classify because a freelancer may be working for one firm for a period of time and then, for another firm for a different period of time. The freelancers may also not be working for some period of time. Hence, they can be employed for a month and then unemployed for another month. So, they may or may not be called "workers" or "firms".

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Most popular questions from this chapter

Suppose that the government has raised by $10 a per-carat tax rate it imposes on diamonds in an effort to influence the production of these particular goods by each of the firms that produce them and purchases by individual consumers. Would we apply microeconomic or macroeconomic analysis to analyze this policy action?

Consider two models for estimating, in advance of an election, the shares of votes that will go to rival candidates. According to one model, pollsters’ surveys of a randomly chosen set of registered voters before an election can be used to forecast the percentage of votes that each candidate will receive. This first model relies on the assumption that unpaid survey respondents will give truthful responses about how they will vote and that they will actually cast a ballot in the election. The other model uses prices of financial assets (legally binding IOUs) issued by the Iowa Electronic Markets, operated by the University of Iowa, to predict electoral outcomes. The final payments received by owners of these assets, which can be bought or sold during the weeks and days preceding an election, depending on the shares of votes the candidates actually end up receiving. This second model assumes that owners of these assets wish to earn the highest possible returns, and it indicates that the market prices of these assets provide an indication of the percentage of votes that each candidate will actually receive on the day of the election.

(a) Which of these two models for forecasting electoral results is more firmly based on the rationality assumption of economics?

(b) How would an economist evaluate which is the better model for forecasting electoral outcomes?

Some people claim that the “economic way of thinking” does not apply to issues such as health care. Explain how economics does apply to this issue by developing a “model” of an individual’s choices.

For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:

(a) An economic study of the number of online searches that individuals conduct before selecting a particular item to purchase online presumes that people are interested only in their own satisfaction, pursue their ultimate objectives, and consider every relevant option.

(b) An economist seeking to predict the effect that an increase in a state's sales tax rate will have on consumers' purchases of goods and services resumes that people are limited in their ability to process information about how the sales-tax-rate increase will influence the after-tax prices those consumers will pay.

(c) To evaluate the impact of an increase in the range of choices that an individual confronts when deciding among devices for accessing the Internet, an economic researcher makes the assumption that the individual is unable to take into account every new Internet-access option available to her.

Explain which is the independent variable and which is the dependent variable for each of the following examples.

(a) Once you determine the price of a notebook at the college bookstore, you will decide how many notebooks to buy.

(b) You will decide how many credit hours to register for this semester once the university tells you how many work-study hours you will be assigned.

(c) You anticipate earning a higher grade on your next economics exam because you studied more hours in the weeks preceding the exam.
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