Macroeconomics for Today (MindTap Course List)
Macroeconomics for Today (MindTap Course List)
9th Edition
ISBN: 9781305507142
Author: Irvin B. Tucker
Publisher: Cengage Learning
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Chapter 1, Problem 4SQ
To determine

The ceteris paribus assumption.

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If you buy something, you are never ripped off, at least according to the way economists think. If you are willing to spend the money for something, then it has at least that much utility to you. Think about the following three situations:  In this very moment  A baseball game in a ballpark that does not allow outside food and drink   The end a three-mile hike in the desert when you forgot water  In each situation, how much would you be willing to pay for the first bottle of water? Would you buy a second bottle of water? If so, how much would you pay? Discuss how utility changes in different circumstances and with each additional unit you buy.
Suppose that turmoil overseas increases gasoline prices in cities across the United States. Using the urban model with agricultural land, answer the following questions. Assume that all individuals are identical, that the supply-demand equilibrium holds, and that the city’s population must fit within its boundary.    What happens to the building heights near the CBD? Do they become taller? Smaller? And why?   What happens to dwelling sizes near the CBD? Do they become taller? Smaller? And why?     What happens to population density in the suburbs? Increase? Decrease? Why?
Suppose that one summer the weather is very hot. How does this event affect the market for ice cream? And How a decrease in supply of ice cream affects the equilibrium price and quantity? Draw the graph according to the situations above.  Which of the following statements are examples of positive economic analysis? Which are examples of normative analysis?a. The inheritance tax should be repealed because it is unfair.b. Allowing Chile to join NAFTA would cause wine prices in the United States to drop.c. The first priorities of the new regime in the Democratic Republic of Congo (DRC, formerly Zaire) should be to rebuild schools and highways and to provide basic health care.
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