Here are questions 1c and 1d from Econ 101 Midterm #1, administered on October 8:

c. People have debated whether the federal government should control executive pay. Use a supply and demand diagram to explain how binding controls would affect the market for executives.

d. Does the price control increase or decrease the efficiency of the market? How do you know? How might market participants circumvent the controls?

Here's a headline from yesterday's Wall Street Journal: "Pay Czar to Slash Compensation at Seven Firms."

I realize that these are firms that have gotten enormous sums from the Banking Sector Unification Plan, but it isn't clear to me how one can get strong economic performance by further distorting the market for executive talent. Wasn't the goal all along to make sure that these firms stay afloat? How do the feds plan to do this after all the talent jumps ship? Or maybe--just maybe--they should have been allowed to go bankrupt to begin with.