Bartleby Sitemap - Textbook Solutions
All Textbook Solutions for Principles of Economics, 7th Edition (MindTap Course List)
1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR7QR8QR9QR10QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PA10PA11PA12PA1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR7QR8QR9QR10QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PA1QQ2QQ3QQ4QQ1QR2QR3QR4QR5QR6QR7QR8QR9QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PAConsider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increases or decreases. Then draw a diagram to show the effect on the price and quantity of minivans. a. People decide to have more children. b. A strike by steelworkers raises steel prices. c. Engineers develop new automated machinery for the production of minivans. d. The price of sports utility vehicles rises. e. A stock market crash lowers peoples wealth.4PA5PA6PA7PA8PA9PA10PA11PADefine the price elasticity of demand. Explain the relationship between total revenue and the price elasticity of demand.Define the price elasticity of supply. Explain why the price elasticity of supply might be different in the long run than in the short run.3QQ1QRList and explain the four determinants of the price elasticity of demand discussed in the chapter.3QR4QRIf demand is elastic, how will an increase in price change total revenue? Explain.What do we call a good with an income elasticity less than zero?How is the price elasticity of supply calculated? Explain what it measures.If a fixed quantity of a good is available, and no more can be made, what is the price elasticity of supply?9QRA life-saving medicine without any close substitutes will tend to have a. a small elasticity of demand. b. a large elasticity of demand. c. a small elasticity of supply. d. a large elasticity of supply.The price of a good rises from 8 to 12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is a. 1/5. b. 1/2. c. 2. d. 5.A linear, downward-sloping demand curve is a. inelastic b. unit elastic. c. elastic. d. inelastic at some points, and elastic at others.4QCMCAn increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.6QCMC1PA2PASuppose the price elasticity of demand for heating oil is 02. in the short run and 0.7 in the long run. a. If the price of heating oil rises from 1.80 to 2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b. Why might this elasticity depend on the time horizon?A price change causes the quantity demanded of a good to decrease by 30 percent, while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic? Explain.5PASuppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.Maria has decided always to spend one-third of her income on clothing. a. What is her income elasticity of clothing demand? b. What is her price elasticity of clothing demand? c. If Marias tastes change and she decides to spend only one-fourth of her income on clothing, how does her demand curve change? What is her income elasticity and price elasticity now?The New York Times reported (Feb. 17, 1996) that subway ridership declined after a fare increase: There were nearly four million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to 1.50, than in the previous December, a 4.3 percent decline. a. Use these data to estimate the price elasticity of demand for subway rides. b. According to your estimate, what happens to the Transit Authoritys revenue when the fare rises? c. Why might your estimate of the elasticity be unreliable?9PA10PAYou are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of admission? Explain.12PA1QQ2QQ1QR2QR3QR4QR5QR6QR7QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PAA case study in this chapter discusses the federal minimum-wage law. a. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply-and-demand diagram of the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers. b. Now suppose the secretary of labor proposes an increase in the minimum wage. What effect would this increase have on employment? Does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? c. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? d. If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic?9PA10PA1QQ2QQ3QQ1QR2QR3QR4QR5QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PAA friend of yours is considering two cell phone service providers. Provider A charges 120 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges 1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD = 150 50P, where P is the price of a minute. a. With each provider, what is the cost to your friend of an extra minute on the phone? b. In light of your answer to (a), how many minutes with each provider would your friend talk on the phone? c. How much would she end up paying each provider every month? d. How much consumer surplus would she obtain with each provider? (Hint: Graph the demand curve and recall the formula for the area of a triangle.) e. Which provider would you recommend that your friend choose? Why?11PA1QQThe demand for beer is more elastic than the demand for milk. Would a tax on beer or a tax on milk have a larger deadweight loss? Why?3QQ1QR2QR3QRWhy do experts disagree about whether labor taxes have small or large deadweight losses?What happens to the deadweight loss and tax revenue when a tax is increased?1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PA10PA1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PA10PA11PA1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PAGreater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. a. Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output. b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.5PAThe many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: a. The cost of producing Zlurp is 150, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) How many bottles will each Whovillian consume? What is each persons consumer surplus? b. Producing Zlurp creates pollution. Each bottle has an external cost of 1. Taking this additional cost into account, what is total surplus per person in the allocation you described in part (a)? c. Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by one bottle. What happens to Cindys welfare (her consumer surplus minus the cost of pollution she experiences)? How does Cindys decision affect total surplus in Whoville? d. MayorCrinch imposes a 1 tax on Zlurp. What is consumption per person now? Calculate consumer surplus, the external cost, government revenue, and total surplus per person. e. Based on your calculations, would you support the mayors policy? Why or why not?7PA8PA9PA10PA1QQ2QQ3QQ1QR2QR3QR4QR1QCMC2QCMC3QCMC4QCMC5QCMC6QCMC1PA2PA3PA4PA5PA6PA7PA8PA9PA10PA1QQ2QQ3QQ1QR2QR3QR4QR5QR6QR7QR1QCMC2QCMC