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Exploring Business

v5.0 Karen Collins
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1.10 Cases and Problems

Learning on the Web

Calculating Unemployment and the Value of Your First Dollar

You read in the chapter that an important goal of all economies is to make jobs available to everyone who wants one. Review the discussion on unemployment on pages 1 and 2 in the U.S. Department of Labor’s February 2023 news release. 

  1. Answer the following questions:

    1. Is the current level of unemployment rising or falling?

    2. What groups of individuals are not included in the calculation of the unemployment rate? (Hint: To answer this question, refer to the “frequently asked questions” section found at the bottom of the report.)

    3. If these individuals were included, would the unemployment rate rise or fall?

    4. What can be done to help these workers enter the labor force?

  2. Do you remember the first dollar you earned? Maybe you earned it delivering newspapers, shoveling snow, mowing lawns, or babysitting. How much do you think that dollar is worth today? Go to the WestEgg website and find the answer to this question. After determining the current value of your first dollar, explain how the calculator was created. (Hint: Apply what you know about CPI.)

Career Opportunities

Is a Career in Economics for You?

Are you wondering what a career in economics would be like? Go to the Occupational Outlook Handbook on the U.S. Department of Labor website and review the outlook for economists. Using the tabs above the words “Work Environment,” look for answers to the following questions:

  1. What issues interest economists?

  2. What industries employ the most economists? 

  3. What educational background, training, and qualities are needed for these jobs?

  4. What is the current job outlook for economists?

  5. What is the average salary for an economist? 

Ethics Angle

How Much Is That CD in the Window?

The 1990s were a good time to buy CDs, mainly because discounters such as Walmart and Best Buy were accumulating customers by dropping prices from $15 to $10. They were losing money, but they figured that the policy still made good business sense. Why? They reasoned that while customers were in the store to shop for CDs, they’d find other, more profitable products.

The policy was a windfall for CD buyers, but a real problem for traditional music retailers such as Tower Records. With discounters slashing prices, CD buyers were no longer willing to pay the prices asked by traditional music retailers. Sales plummeted, and companies went out of business.

Ultimately, the discounters’ strategy worked: stores such as Walmart and Best Buy gained customers who once bought CDs at stores like Tower Records.

Let’s pause at this point to answer the following questions:

  1. Does selling a product below cost make business sense?

  2. Whom does it hurt? Whom does it help?

  3. Is it ethical?

Let’s continue and find out how traditional music retailers responded to this situation.

They weren’t happy, and neither were the record companies. Both parties worried that traditional retailers would put pressure on them to reduce the price that they charged for CDs so that retailers could lower their prices and compete with discounters. The record companies didn’t want to lower prices. They just wanted things to return to “normal”—to the world in which CDs sold for $15 each.

Most of the big record companies and several traditional music retailers got together and made a deal affecting every store that sold CDs. The record companies agreed with retail chains and other CD outlets to charge a minimum advertised price for CDs. Any retailer who broke ranks by advertising below-price CDs would incur substantial financial penalties. Naturally, CD prices went up.

Now, think about the following:

  1. Does the deal made between the record companies and traditional retailers make business sense?

  2. Whom does it hurt? Whom does it help?

  3. Is it ethical?

  4. Is it legal?

Team-Building Skills

Price Comparison

Get together in groups of four selected by your instructor and pick any three items from the following list:

  1. Pint of milk

  2. Gallon of gas

  3. Roundtrip airline ticket between Boston and San Francisco

  4. Large pizza

  5. Monthly cost of an internet connection

  6. CD by a particular musician

  7. Two-day DVD rental

  8. Particular brand of DVD player

  9. Quarter-pound burger

Outside of class, each member of the team should check the prices of the three items, their own sources. At the next class meeting, get together and compare the prices found by team members. Based on your findings, answer the following questions as a group:

  1. Are the prices of given products similar or do they vary?

  2. Why do the prices of some products vary while those of others are similar?

  3. Can any price differences be explained by applying the concepts of supply and demand or types of competition?

The Global View

Prioritizing the Distribution of the COVID-19 Vaccine

As you are aware, the pharmaceutical industry (with most of the funding coming from the federal government) came out with vaccines for COVID-19, but the supply of the vaccines was limited. As with other items where the supply is limited, questions need to be addressed concerning its distribution—specifically, who gets the vaccine and who doesn’t?

Read these two articles:

Then, provide your opinion on these two topics:

  1. Globally, should the vaccine go to the countries where they are most needed or to the rich countries that can afford to buy the vaccine? In other words, should the distribution be based on equity or on market-driven factors?

  2. Within the United States, if there were an imaginary line waiting for the vaccine, which group or groups should be at the front of the line? Create a prioritized list of those who should receive the vaccine.