WEW-029

Microeconomics Question from Walter E. Williams:[]

"Give brief (a sentence or two) comments to the following:

(a) Demand curves tend to be more elastic in the long run than in the short run.
(b) Men (persons) do not differ significantly from roaches.
(c) Unemployment means that there are not enough jobs to go around.
(d) The tendency for mechanics to charge women higher prices for a given emergency repair than that charged men."

(a) This part is the same as WEW-022
(b) Men (persons) maximize utility subject to constraints, so do cockroaches. Observe a cockroach taking the shortest path between two points (by running across the kitchen floor).
(c) Unemployment simply means that people are holding out for higher wages than they are currently receiving. There is some price at which all people would be employed.
- People can be in between jobs -- there are search costs for new jobs including forgone employment
- Leisure has a higher opportunity cost -- it is utility improving not to work
- Government regulation (minimum wages laws, for example) -- prevent people from taking jobs they would otherwise be happy to take.
(d) Women may view themselves as having fewer or more costly alternative choices than do men, which makes their demand curve for auto repairs more inelastic. Mechanics therefore price discriminate. A man might be able to walk, fix the car himself, or know of another mechanic. A woman (assuming this stereotype) is less likely to substitute in these other options, and therefore does not compete on price. (NOTE: I have known women to get their cars worked on by simply showing up with fresh baked cookies, so it cuts both ways.)