Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 2, Problem 17RQ
Is the economic model of decision-making intended as a literal description of how individuals, firms, and the governments actually make decisions?
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2. Understanding the U.S. poverty line
The following table shows the U.S. poverty thresholds for 2021 by size of family and number of related children under the age of 18. All figures are in
dollars. For example, a family with two adults and three children is considered to be living in poverty if the family's income in 2021 is below $32,338.
Use the table to answer the questions that follow.
Size of Family Unit
One person (unrelated individual)
None
One
Related Children under 18 Years
Two Three
Four
Five
Under 65 years
65 years and over
Two persons
Households under 65 years
Households 65 years and over
Three persons
Four persons
Five persons
Six persons
Seven persons
Eight persons
Nine persons or more
14,097
12,996
18,145 18,667
16,379 18,606
21,196 21,811 21,831
27,949 28,406 27,479 27,575
33,705 34,195 33,148 32,338 31,843
38,767 38,921 38,119 37,350 36,207 35,529
44,606 44,885 43,925 43,255 42,009 40,554
49,888 50,329 49,423 48,629 47,503 46,073
60,012 60,303 59,501 58,828 57,722…
The accompanying graphs show the production possibilities frontiers (PPFS) for Italy and India for their domestic production of
olives and tea. Without trade, assume that each country is consuming olives and tea at point a.
Use the information provided in the graphs to answer the following questions.
Olives (millions of tons)
Italy
12
10
8
60
2
a
PPF
0
10
20
30
40
Tea (millions of tons)
India
12
Olives (millions of tons)
4
6
Co
10
2
a
0
PPF
10 20 30 40 50 60
Tea (millions of tons)
QUESTION 4 (11 MARKS)
A group
of grocery stores will buy 80 units of apples from the wholesaler if the price is
$320 and 120 units if the price is $280. The supplier will supply 50 units if the price is
$100, and 75 units if the price is $150.
i.
Write the demand and supply functions.
(4 marks)
ii.
Find the market equilibrium.
(3 marks)
111.
If the government impose a tax of $30. Find the new market equilibrium.
(4 marks)
Chapter 2 Solutions
Principles of Economics 2e
Ch. 2 - Suppose Alphonsos town raised the price of bus...Ch. 2 - Return to the example in Figure 2.4. Suppose there...Ch. 2 - Could a nation be producing in a way that is...Ch. 2 - What are the similarities between a consumers...Ch. 2 - Individuals may not act in the rational,...Ch. 2 - Would an op-ed piece in a newspaper urging the...Ch. 2 - Would a research study on the effects of soft...Ch. 2 - Explain why scarcity leads to tradeoffs.Ch. 2 - Explain why individuals make Choices that are...Ch. 2 - What is comparative advantage?
Ch. 2 - What does a production possibilities frontier...Ch. 2 - Why is a production possibilities frontier...Ch. 2 - Explain why societies cannot make a choice above...Ch. 2 - What are diminishing marginal returns?Ch. 2 - What is productive efficiency? Allocative...Ch. 2 - What is the difference between a positive and a...Ch. 2 - Is the economic model of decision-making intended...Ch. 2 - What are four responses to the claim that people...Ch. 2 - Suppose Alphonsos town raises the price of bus...Ch. 2 - During the Second World War, Germanys factories...Ch. 2 - It is clear that productive inefficiency is a...Ch. 2 - What assumptions about the economy must he true...Ch. 2 - Do economists have any particular expertise at...Ch. 2 - If the price of a magazine is 4 each, what is the...Ch. 2 - If the price of a pie is 12, what is the maximum...Ch. 2 - Draw Maries budget constraint with pies on the...Ch. 2 - What is Maries opportunity cost of purchasing a...
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- The accompanying graphs show the production possibilities frontiers (PPFS) for Italy and India for their domestic production of olives and tea. Without trade, assume that each country is consuming olives and tea at point a. Use the information provided in the graphs to answer the following questions. Olives (millions of tons) Italy 12 10 8 60 2 a PPF 0 10 20 30 40 Tea (millions of tons) India 12 Olives (millions of tons) 4 6 Co 10 2 a 0 PPF 10 20 30 40 50 60 Tea (millions of tons)arrow_forwardThe U.S. Census Bureau conducts annual surveys to obtain information on the percentage of the voting-age population that is registered to vote. Suppose that 387 employed persons and 359 unemployed persons are independently and randomly selected, and that 243 of the employed persons and 202 of the unemployed persons have registered to vote. Can we conclude that the percentage of employed workers (P1), who have registered to vote, exceeds the percentage of unemployed workers (P2), who have registered to vote? Use a significance level of a = 0.01 for the test. Step 2 of 6: Find the values of the two sample proportions, p₁ and 2. Round your answers to three decimal places.arrow_forwardPlentilandia is a country facing a recession. Plentilandian consumers become pessimistic about future economic conditions and reduce their total consumption. Use diagrams to answer the following: a) Assume marginal propensity to consume is high in Plentilandia. What is the impact on consumption, investment output, interest rate and the trade balance? b) Assume the marginal propensity to consume foreign goods and services is high in Plentilandia. What is the impact on consumption, investment output, interest rate and the trade balance?arrow_forward
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- The figure shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 5. At the start of the game each firm charges a low price and each earns a profit of $7,000. Suppose pricing PlayStations is a repeated game in which Walmart and Target will be selling the game system in competition over a long period of time. In this case, what is the most likely outcome? OA. a cooperative equilibrium in which each firm charges the low price OB. a cooperative equilibrium in which each firm charges the high price C. a noncooperative equilibrium in which each firm charges the high price OD. a noncooperative equilibrium in which each firm charges the low price et ("T") High "T" earns $10,000 price Walmart ("W") High price "W" earns $10,000 "T" earns $5,000 "W" earns Low price "T" earns $14,000 Low price "W" eams $14,000 $7,000 $5,000 "T" earns $7,000 "W" earnsarrow_forwardUsing a diagram evaluate how the following shocks affect the country's ability to defend a fixed exchange rate. a) The foreign interest rate decreases. b) The central bank sells government bonds.arrow_forwardConsider the following scenario. The Central Bank announces a permanent increase in the money supply of 7%. The interest rate decreases from 5% to 3%. From what you learned in this course, make a step-by-step prediction of how the price level and the exchange rate change in the short run and in the long run. You may draw a diagram to support your answer.arrow_forward
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