Jeff Ens

301199991
Problem Set 8

Mar 30, 2014

























8. Consider the lyrics from Some Days You Gotta Dance by the Dixie Chicks. In the
song the singer says it is quitting time on a Friday night, everyone is ready to go, and
the boss is screaming at the singer saying she has to stay. She cant take it, shes got
to get away:

Some days you gotta dance
Live it up when you get the chance
Cause when the world doesnt make no sense
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Gotta loosen up those chains and dance

In our popular culture we think of jobs as goods. For example, a government always proudly
announces that weve created more jobs than the previous administration. As a new
economist, is it better to think of jobs as goods or bads? How does the song reect in your
answer?

Firstly, one must remember that a bad is an object whose consumption lowers the utility of the
consumer. Assuming the wages for all jobs are positive, the consumption of a job always
increases the utility of the consumer, since individuals receive compensation for their time.
However, the amount of utility a job affords varies, as it depends on the wage which is being
offered for the particular job, relative to the value an individual places on leisure. For example, if
the wage for a particular job is very low, the opportunity cost of working might be higher than the
opportunity cost of leisure. Despite the fact that leisure offers the individual a higher level of
utility, jobs are still goods as they increase the utility of the consumer. The lyrics in the song
demonstrate that the singer, at this point in time, values leisure more than work. However, at
the beginning of her shift, she likely valued her job more than leisure, as she wanted to generate
income. Ultimately, most jobs cannot be divided into hourly contractual agreements, and one
must asses their own demand for a job on a larger scale, considering the total value of a job. As
a result, some sacrices will have to be made, working when it is undesirable for the individual,
because the individual desires an income.

18. Airlines in the United States were regulated in the 1970s. The regulations mostly restricted
the ability of airlines to compete on specic routes.

a) What would this regulation have done to the elasticity of demand for a given airline on a
specic route. What would this have done to the price consumers paid?

These regulations would decrease the number of choices available to the consumer
when purchasing ights on a specic route. As a result, the elasticity would decrease,
because there are fewer substitutes on a specic route. Reduced elasticity allows
airlines to charge higher prices.

b) What would this regulation have done to pilot salaries?

Since prices have increased, the value of the pilots marginal product will also increase,
resulting in a wage increase for pilots.