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If Jane is currently willing to trade 4 movie tickets for 1 basketball ticket, then she must like basketball better than movies. True or false? Explain.
Consumer preferences for various commodities did not change during the analysis. In some situations, however, preferences do change as consumption occurs.
What is the difference between ordinal utility and cardinal utility? Explain why the assumption of cardinal utility is not needed in order to rank consumer choices.
What happens to the marginal rate of substitution as you move along a convex indifference curve? A linear indifference curve?
In 1998, Americans smoked 470 billion cigarettes. The average retail price was $2 per pack. Statistical studies have shown that the price elasticity of demand is -0.4, and the price elasticity of supp
Now, suppose the U.s. government wants to buy enough wheat to raise the price to $350 per bushel With this drop in export demand, how much wheat would the government have to buy? How much would this c
If both the agency and the board are right about demand and supply, what is the free-market price? What is the change in city population if the agency sets a maximum average monthly rent of $100 and a
Suppose that rather than the declining demand assumed in Example 2.7, a decrease in the cost of copper production causes the supply curve to shift to the right by 40 percent. How will the price of cop
Where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.00. a. Suppose P = $1.00. What is the price elasticity of demand? What is the cross
Use supply and demand curve shifts to illustrate the effect of the following events on the market for apples. Make clear the direction of the change in both price and quantity sold
Suppose the government regulates the prices of beef and chicken and sets them below their market clearing levels. Explain why shortages of these goods will develop and what factors will determine the
If a 3-percent increase in the price of corn flakes causes a 6-percent decline in the quantity demanded, what is the elasticity of demand?
At the time this book went to print, the minimum wage was $5.85. To find the current value of the CPI, go to Click on Consumer Price Index-All Urban Consumers (Current Series) and select U.S. All item
Fast-food chains like McDonald"s, Burger King, and Wendy"s operate all over the United States. Therefore, the market for fast food is a national market.
Suppose that the Japanese yen rises against the U.S. dollar-that is, it will take more dollars to buy a given amount of Japanese yen. Explain why this increase simultaneously increases the real price
It is often said that a good theory is one that can be refuted by an empirical, data-oriented study. Explain why a theory that cannot be evaluated empirically is not a good theory.
From 1990 to 1997 in the United States, the number of working men grew by 6.7 percent; the number of working women grew by 11 percent. During this time, average wages for men grew by 20 percent
The same rightward shift of the demand curve may produce a very small or a very large increase in quantity, depending on the slope of the supply curve. Explain this conclusion with diagrams.
Find the equilibrium price and quantity after the shift of the demand curve.If, instead, two new stores that sell T-shirts open up in town, which of the following might be the new supply curve?
How are the following demand curves likely to shift in response to the indicated changes?
What is the definition of the velocity of money? Use the concept of velocity to explain how a given quantity of money balances can be used to pay for a relatively large volume of con
In Tobin s analysis of the speculative demand for money, people will hold both money and bonds, even if bonds are expected to earn a positive return. Is this statement true, false, or uncertain? Expla
Why is mutual interdependence important under oligopoly, but not so important under perfect competition, monopoly or monopolistic competition?
Identify a product that could be promoted using a social networking site such as Facebook. In about 100 words, explain why your chosen product would be a good candidate for a social networking-based p
Regardless of whether the short run or the long run is being considered, a firm should continue to operate as long as its price is greater than its average variable cost