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    Several Economics Questions

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    1. With regards to the below explanation, is RG III a sunk cost? Please provide a substantial one-two paragraph response.

    The moment the owner Daniel Snyder signed off on trading those draft picks to the St. Louis Rams to get Griffin, those picks were gone forever. Poof! Never coming back.

    From that point, the strictly logical approach would have been for coaches and management to treat Griffin like any other rookie who had great potential but a lot of work to do to live up to it. That doesn't mean that they should have plopped him on the bench every time he made an errant throw. Of course he needed (and, apparently, still needs) to learn the pro-level game, and it's worth sacrificing wins today if you are getting a more skilled player for the longer run. No one argues that the 1998 Indianapolis Colts should have parked Peyton Manning on the bench amid his 3-13 rookie season.

    But there are plenty of indications that rather than treat Griffin like another promising but unfinished player, both fans and, at times, the team's coaches seem to view him through the prism of what was paid to get him.

    2. In regards to the below, does the US tolerance for inequality drive our growth? Please provide a substantial one-two paragraph response.

    Rather than promoting particular types of industries or clusters (e.g., biotech), politicians should:
    - remove barriers to entry, and growth, for all sorts of business; and
    - recognizee the importance of the profit motive. The chance of making big money is what drives people to take huge risks and endure years of hardship.

    Finally, Politicians and bureaucrats often fail to recognize that entrepreneurial success entails things that "set their teeth on edge."

    Entrepreneurs thrive on inequality: the fabulous wealth they generate in America makes the country more unequal. They also thrive on disruption, which creates losers as well as winners.

    3. In regards to the below explanation, should we raise the minimum wage? Please provide a substantial one-two paragraph response.

    Mark Perry has a nice piece on proposals to raise the minimum wage from $7.50 to $10, a 38% increase. He begins with research that finds an elasticity of demand between -0.1 and -0.15 or a 2-3 percent reduction in employment from a 20 percent increase in the minimum wage.
    Accordingly, a 38 percent increase in the minimum wage to $10 per hour would reduce teenage employment by between 3.8 and 5.7 percent. And what would that mean for the number of jobs eliminated and the increase in the jobless rate?

    If the 38 percent increase in the minimum wage to $10 per hour had the minimum effect of reducing teenage employment by "only" 3.8 percent, that would put 171,000 currently-employed teenagers out of work and increase the teen jobless rate almost three full percentage points to 26.6 percent. At the high end, a 5.7 percent reduction in teen employment would put almost one-quarter million teenagers out of work and drive the teenage jobless rate up to 28.1 percent, the highest rate in history.

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    Solution Preview

    Please see the attached file for the guide.

    Yes, the money paid by St. Louis Rams' owner, Daniel Synder, to 'acquire' Griffin is a sunk cost. Regardless of the coaches' decision - whether to bench RG III or make him play for as many as he could - the amount paid will NOT increase, decrease or even be refunded. This money is truly sunk. Hence, the decision on what to d with RG III should not be based on how much money was paid to get him.
    Rather this decision should be based on St. Louis Rams' plan for Griffin. This plan, like for any other player whether they were acquired for several millions or for just a few hundreds of thousands, should dictate how this player is utilized in games. A player, an expensive one at that, becomes just an expensive decoration on the team's bench if he is not allowed to play and hone his skills on the field ...

    Solution Summary

    The solution answers the different economic questions step-by-step.