2) A decrease in production costs of good X led to higher equilibrium quantity and higher price of good X. Which of the following describes good X? If you believe there are several correct answers, chose the one that provides the most precise (narrowest) description of X. A) X is an Abrasive good B) X is a Barber good C) X is a Curtius good D) X is a Dremen good E) X is an Elapsed good F) X is a Friedman good G) X is a Giffen good H) X is Hash good I) X is a normal good J) X is a sub-normal good K) X is an inferior good L) X is a superior good M) The scenario described in this question is impossible if all agents make rational decisions N) None of the above

2) A decrease in production costs of good X led to higher equilibrium quantity and higher price of good X. Which of the following describes good X? If you believe there are several correct answers, chose the one that provides the most precise (narrowest) description of X. A) X is an Abrasive good B) X is a Barber good C) X is a Curtius good D) X is a Dremen good E) X is an Elapsed good F) X is a Friedman good G) X is a Giffen good H) X is Hash good I) X is a normal good J) X is a sub-normal good K) X is an inferior good L) X is a superior good M) The scenario described in this question is impossible if all agents make rational decisions N) None of the above

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 2TY

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You are an advisor to the mayor of Iola, a lovely little town with a big problem. Everyone in town drives gas-guzzling Duramax 4x4 pickup trucks (duallies with lift kits, naturally) and when the price of gasoline rose last year consumers really felt the pain. But now that gasoline supply is back to normal, the mayor should be happy that the citizens are able to resume their truck driving habits. The current daily market for gasoline in Iola is described by the following equations: Demand: P = 4 – Q Marginal Private Cost: P = 1 + .5 Q Where P is in dollars per gallon and Q is in 1000s of gallons of gasoline per day. Surprisingly, the mayor isn’t completely happy with the new price of gasoline. “When we were paying $4.50 a gallon, there was less congestion, less noise, and you could actually ride a bike without getting run off the road by a giant truck,” complains the mayor. “And besides, the air was cleaner.” 3. What economic concept explains the mayor’s unhappiness? 4.…