1. What was the central conclusion of Dennis Gossen’s research oninformation in labor markets? {That more unemployment would occur in thoseoccupations where employers offer a wide variety of wages for the same work} Isthere a connection between this research on information in the labor market andthe solution to the murder mystery?2. Both Valerie Danzig and Oliver Wuobjected to the assumption concerning human nature Dennis Gossen displayed inhis research. What were their objections to Gossen’s assumption?
In Chapter 11 Henry Spearman defended Gossen’s approach in an attempt to showthat Danzig and Wu were misguided in theircriticisms. What was Spearman’s aurgument?3. In Chapter 3, H. Spearman indicated that as his income rose he was lessable to afford interruptions and diversions from his work. What concept ineconomics explains this?4. How did Henry Spearman use economics to account for his father’s politebehavior to the customers in his shop and his father’s irritable behavior tohis family?5. In chapter 4, Oliver Wu used cost-benefit analysis to determine whetherhe should steal a book from the HarvardUniversity library. Healso applied this type of analysis to other questions of illegal behavior. Describecost-benefit reasoning as it applies to theft.6. In Chapter 5, H. Spearman realized that his daughter, Patty confused“demand” with “quantity demanded”. What is the distinction?
7. In Chapter 6, Professor Spearman explained that the pricing system inFilene’s bargain basement is related to what Alfred Marshall years earliercalled “consumer surplus.” How are the two related? Parenthetically,what connection is there between Filene’s basement and a Dutch auction?8. In Chapter 7, the economist hero explained why he would be willing toshop longer for an automobile than for a paring knife. Why does anunderstanding of this argument ultimately provide the key to the solution ofthe mystery?9. In Chapter 7, Henry Spearman explained the price of rare postage stampsto Christolph Burckhardt. His explanation rejects Karl Marx’s labor theory ofvalue. What are the other applications of this principle where the value orprice of a product seem unrelated to its labor input?10. In Chapter 8, M. Bell was critical of D. Gossen’s argument that businessfirms should be permitted to bid for a license to pollute. What was Bell’s objection toGossen’s argument? From an economic perspective, what was the flaw in Bell’s position.11. In Chapter 8, F. Barrett was portrayed as believing income should bedistributed according to the refinement of tastes in society in contrast to amarket system in which those with elegant tastes often receive the lowestsalaries. Do you agree with Barrett’s position?12. In Chapter 8, Sophie Ustinov expressed the opinion there are too manybrands of products that are chemically identical. Examples were liquid bleach,aspirin, and evaporated milk. Because the prices of the various brands of suchproducts sometimes differed, she always purchased the brand with the lowestprice. When it came to buying dog food, she judged quality by price. WasProfessor Ustinov being rational? Explain.13. In Chapter 11, H. Spearman defended the position that trademarks andbrand names provide useful information to consumers. What is the basis for hisargument? Is it persuasive? Why or why not?14. In Chapter 13, S. Ustinov claimed she was irrational for eating so muchfood while a passenger on the QE2. Spearman argued that she was rational andbased his argument on marginal utility theory. Reconstruct his argument andapply it to explain how rational consumption patterns might differ at twoeating establishments: an all-you-can-eat buffet versus a la carte.