A survey shows an increase in drug use by young people. In theensuing debate, two hypotheses are proposed:Reduced police efforts have increased the availability of drugson the streetCutbacks in education have decreased awareness of the dangersof drug addictionWhat could you use to distinguish between these two explanations?Whether the equilibrium quantity of drugs increased or decreased. If thequantity increased, then it was driven by cutbacks in educationWhether the equilibrium quantity of drugs increased or decreased. If thequantity increased, then it was driven by reduced police efforts.Whether the equilibrium price of drugs increased or decreased. If theprice increased, then it was driven by cutbacks in educationWhether the equilibrium price of drugs increased or decreased. If theprice increased, then it was driven by reduced police effortsThe change in equilibrium price is ambiguous

The correct answer to the above-mentioned question is that the difference between the two…

Answered: A survey shows an increase in drug use…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 1SQP

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Suppose that a drug that was illegal has been made legal. It is observed that the total expenditure on this drug falls with legalisation. While non-economists might explain this in terms of a change inconsumer tastes, as economists we can explain this while sticking with the assumption that consumer tastes have not changed. Draw a demand and supply diagram showing the case where total expenditureclearly and unambiguously falls (with no shift in the demand curve) and provide a written explanation. ( maximum word limit: 100 words)
Suppose income-tax rates are increased and as a result consumers experience a decrease in income earned from working. Basic microeconomics predicts that, Demand for normal goods will rise. Demand for inferior goods will rise. Demand for normal goods will fall. Demand for inferior goods will rise and demand for normal goods will fall.
Suppose that in response to learning that some sick individuals were denied health insurance, the government mandates that insurance companies offer insurance to everyone at unregulated rates. (a) Would this help reduce the number of uninsured? Explain. (b) An alternative strategy for reducing the number of uninsured might be to mandate that insurance companies charge individuals with health problems no more than individuals without health problems. Would this help reduce the number of uninsured? Explain.
b) In a hypothetical situation, Government of Pakistan wants to put a curb on cigarette smoking through economic policy: i. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs Rs.200 and the government wants to reduce smoking by 22 percent, by how much should it increase the price? ii. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now? iii. Studies also find that teenagers have a higher price elasticity of demand than adults. Why might this be true?
Refer to Figure 4-8. To legally drive a taxicab in New York City, you must have a medallion issued by the city government. Assume that only 13,200 medallions have been issued. Let's also assume this puts an absolute limit on the number of taxi rides that can be supplied in New York City on any day, because no one breaks the law by driving a taxi without a medallion. Assume as well that each taxi provides 6 trips per day. In that case, the quantity of taxi rides supplied is 79,200 (or 6 rides per taxi × 13,200 taxis). This is shown in the diagram with a vertical line at this quantity. Assume that there are no government controls on the prices that drivers can charge for rides. a. What would the equilibrium price and quantity be in this market if there was no medallion requirement? b. If there was no medallion requirement, indicate the area that represents consumer surplus. c. If there was no medallion requirement, indicate the area that represents producer surplus. d. If there was no…
According to a researcher at the FDA, vegan foods are “the way if the future”. Morepersons have become health conscious and are looking for foods which will fit thislifestyle. One such food is the Beyond Burger, a plant-based alternative to beef. Notably,despite strong demand for beef burgers, the supply chain has seen a host of disruptionsthat are preventing producers from getting their products to market.Beyond Burger’s sales in Canada totaled $3.0 billion at the end of 2021, accounting for20% of all retail sales of burger patties (meat used in burgers), and 40% of the largermarket for vegan foods. By the end of 2025, sales of Beyond Burgers are projected to makeup 40% of all burger sales.i. Illustrate and explain the effect of the increased use of Beyond Burgers on (i) theburger patties market and (ii) the vegan market.
Suppose that both groups of students are on the right track, and each of the events described above arepartially responsible for the decrease in the price of pizzas. Based on your analysis of the explanationsoffered by the two groups of students, how would you determine which of the possible causes was thedominant cause of the decrease in the price of pizza? 1. Whichever change occured first must have beenthe primary cause of the change in the price of pizzas 2. If the equilibrium quantity of pizzas increases,then the demand shift in the market for pizzas must have been larger than the supply shift. 3. if theequilibrium quantity of pizzas increase, then the supply shift in the market for pizzas must have beenlarger than the demand shift. 4. If the price decrease was large, then the supply shift in the martket forpizzas must have been larger than the demand shift
As a government official, Bill wants people to be healthier and consume less high-fructose corn syrup. He has decided to use taxes to discourage people from drinking non-diet soda. How would he describe his decision to an economist? Group of answer choices If I decrease taxes on non-diet soda, there will be an increase in the quantity demanded, which means fewer people will drink non-diet soda. If I increase taxes on non-diet soda, there will be a decrease in demand, which means fewer people will drink non-diet soda. If I increase taxes on non-diet soda, there will be an increase in demand, which means fewer people will drink non-diet soda. If I decrease taxes on non-diet soda, there will be a decrease in demand, which means fewer people will drink non-diet soda. Taxes will have no effect on demand for non-diet soda.
In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand.i. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years. ii. Assuming the Petroleum Company of Barbados did not issue a directive for anincrease in supply and a decrease in demand, explain the problem that would existin the economy and how would this be corrected over time. iii. Illustrate the effect of major gasoline suppliers increasing supply as well as usersreducing their demand. iv. Discuss one factor EACH that you think influence demand and supply for waterheaters. Provide examples v. Is demand for gas is price elastic or price…
In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand. i. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years. ii. Assuming the Petroleum Company of Barbados did not issue a directive for anincrease in supply and a decrease in demand, explain the problem that would existin the economy and how would this be corrected over time.
This is an excercise. Why people rent their house that they own during the pandemic covid 19 for side-income?
The market for coffee is characterized by Qdc=210-Pc and Qsc=2Pc-0.5Pt where QC is the quantity of coffee in hundreds of pounds, PC is the price per hundred pounds of coffee, and PT is the price per hundred pounds of tea. The market for tea is characterized by Qdt=210-Pt and Qst= 2Pt-0.5Pc, where QT is the quantity of tea in hundreds of pounds. Suppose a new medical study touts the benefits of drinking coffee, leading to an increase of 30 pounds of coffee at every price. The new equilibrium price of tea is ____. The new equilibrium price of coffee is _____.

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