Price Competition Chapter

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sex education is designed to increase teenagers "tastes" for premarital sex? How could it act to increase those "tastes"?

The desire for sexual contact is a natural, innate human desire and is not something that can suddenly be stimulated by knowledge like an advertising campaign can make you thirsty for soda. It is possible that sexual education can normalize sexuality and remove a sense of guilt teens might have; however, it can also normalize safe sex and abortion.

Why could the two consequences of sex education discussed above either raise or lower the number of teenage pregnancies that result?

Sex education can lower the number of teenage pregnancies by providing accurate information to teens about sexuality and disabusing them of myths such as the idea the withdrawal method is an effective form of birth control. It can also provide them with information about the best methods of birth control possible. Theoretically, it could increase teen pregnancies if more teens engage in sexual activity if it were normalized in the context of sex education at a younger age yet the teens did not use birth control.

Q3. If cars were made safer for passengers in accidents, how could that lead to an increase in the number of injuries due to car accidents?

In theory, adding safety features to cars could lead to an increase in injuries because people might drive more carelessly out of a false sense of security.

Q4. Why is this analysis an example of an elasticity question?

Price elasticity means the extent to which demand will vary based upon a change in price. Inelastic goods such as necessities vary little based upon price increases or decreases while elastic goods do. This article analyzes sexuality in terms of elasticity: will the demand for sex increase or decrease based upon its relative 'cost.'

Questions for Thought and Discussion:

Q1. Is the claim that raising the minimum wage to $6 or $7 an hour won't reduce low-skill employment consistent with the claim that an even higher minimum wage would reduce low-skill employment?

Yes, because the argument is that employers can easily afford to pay workers a few more dollars an hour but after a certain point the cost of labor becomes too prohibitive, either pricing employers out of business or driving them to seek other venues besides legally employing workers to staff their businesses.

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There is an equilibrium point or 'sweet spot' regarding wages.

Q2. Why are the very lowest skilled workers the ones most likely to be harmed by an increase in the minimum wage?

Low-skilled workers have few marketable assets. They can easily be replaced by technology, family members of the employer, illegal workers, or other mechanisms to obviate the need to pay them a salary. There are many 'substitute goods' for their employment.

Q3. How could raising the minimum wage reduce on-the-job training for minimum wage workers, slowing the growth in their wages over time?

Raising the minimum wage acts as a disincentive to hire workers with little experience and skills. Arguably, the minimum wage acts as a kind of 'training wage' for workers still learning the ins and outs of a particular industry.

Q4. Why might higher-paid, more skilled workers find a higher minimum wage for low-skill workers in the same field in their own self-interest?

The existence of a higher minimum wage for low-skilled workers drives up the price of higher-skilled labor. These workers are necessary so they cannot afford to be cut from the employment budget but the overall economic pressure on wages is upward.

Reflection for Thought and Discussion:

Q1. When would consumers oppose mergers of suppliers? Would rival producers oppose those same mergers?

Consumers fear that consolidation will result in less choice and less price-based competition. Rival producers may oppose the same mergers out of a fear that….....

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