1. What was the central conclusion of Dennis Gossen’s research on information in labor markets?…

1. What was the central conclusion of Dennis Gossen’s research on
information in labor markets? {That more unemployment would occur in those
occupations where employers offer a wide variety of wages for the same work} Is
there a connection between this research on information in the labor market and
the solution to the murder mystery?
2. Both Valerie Danzig and Oliver Wu
objected to the assumption concerning human nature Dennis Gossen displayed in
his research. What were their objections to Gossen’s assumption?

In Chapter 11 Henry Spearman defended Gossen’s approach in an attempt to show
that Danzig and Wu were misguided in their
criticisms. What was Spearman’s aurgument?
3. In Chapter 3, H. Spearman indicated that as his income rose he was less
able to afford interruptions and diversions from his work. What concept in
economics explains this?
4. How did Henry Spearman use economics to account for his father’s polite
behavior to the customers in his shop and his father’s irritable behavior to
his family?
5. In chapter 4, Oliver Wu used cost-benefit analysis to determine whether
he should steal a book from the Harvard
University library. He
also applied this type of analysis to other questions of illegal behavior. Describe
cost-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 in
Filene’s bargain basement is related to what Alfred Marshall years earlier
called “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 to
shop longer for an automobile than for a paring knife. Why does an
understanding of this argument ultimately provide the key to the solution of
the mystery?
9. In Chapter 7, Henry Spearman explained the price of rare postage stamps
to Christolph Burckhardt. His explanation rejects Karl Marx’s labor theory of
value. What are the other applications of this principle where the value or
price of a product seem unrelated to its labor input?10. In Chapter 8, M. Bell was critical of D. Gossen’s argument that business
firms should be permitted to bid for a license to pollute. What was Bell’s objection to
Gossen’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 be
distributed according to the refinement of tastes in society in contrast to a
market system in which those with elegant tastes often receive the lowest
salaries. Do you agree with Barrett’s position?12. In Chapter 8, Sophie Ustinov expressed the opinion there are too many
brands of products that are chemically identical. Examples were liquid bleach,
aspirin, and evaporated milk. Because the prices of the various brands of such
products sometimes differed, she always purchased the brand with the lowest
price. When it came to buying dog food, she judged quality by price. Was
Professor Ustinov being rational? Explain.13. In Chapter 11, H. Spearman defended the position that trademarks and
brand names provide useful information to consumers. What is the basis for his
argument? Is it persuasive? Why or why not?14. In Chapter 13, S. Ustinov claimed she was irrational for eating so much
food while a passenger on the QE2. Spearman argued that she was rational and
based his argument on marginal utility theory. Reconstruct his argument and
apply it to explain how rational consumption patterns might differ at two
eating establishments: an all-you-can-eat buffet versus a la carte.