EBK FOUNDATIONS OF ECONOMICS
EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 9780134516196
Author: BADE
Publisher: PEARSON CO
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Chapter 13.A, Problem 4SPPA
To determine

To explain:

The effect on the relative price of food and haircuts if the sales tax is replaced by the consumption tax and the tax that would be preferred.

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What will happen to the equilibrium price and quantity of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? a. Equilibrium quantity would decrase, but the impact on equilibruim price would be ambiguous. b. Equilibruim price would increase, but the impact on equilibruim quantity would be ambigious. c. Equilibrium quantity would incrase, but the impact on equilibruim would be ambiguous d. Equilibrium price increases and equilibruim quantity decreases  e. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
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