Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 5, Problem 29CTQ
A city has build a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about elasticity of
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1. Income inequality and the poverty rate
The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an
income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set at
an annual income of $40,850 for an individual.
Share of Total Income in Perkopia
(Percent)
Year
Lowest Quintile Second Quintile
Middle Quintile Fourth Quintile
Highest Quintile
2001
4.0
10.0
16.5
23.0
46.5
2007
3.8
9.7
15.0
22.5
49.0
2013
3.4
8.8
14.8
22.0
51.0
2019
3.0
8.2
14.0
21.8
53.0
The data in the table suggest that there was
income inequality from 2001 to 2019.
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)
Chapter 5 Solutions
Principles of Economics 2e
Ch. 5 - From the data in Table 5.5 about demand for smart...Ch. 5 - From the data in Table 5.6 about supply of alarm...Ch. 5 - Why is the demand curve with constant unitary...Ch. 5 - Why is the supply curve with constant unitary...Ch. 5 - The federal 3mm decides to require that automobile...Ch. 5 - Suppose you are in change of sales at a...Ch. 5 - What would the gasoline price elasticity of supply...Ch. 5 - The avenge annual income rises from 25,000 to...Ch. 5 - Suppose the cross-price elasticity of apples with...Ch. 5 - What is the formula for calculating elasticity?
Ch. 5 - What is the price elasticity of demand? Can you...Ch. 5 - What is the price elasticity of supply? Can you...Ch. 5 - Describe the general appearance of a demand or a...Ch. 5 - Describe the general appearance of a demand or a...Ch. 5 - If demand is elastic, will shifts in supply have a...Ch. 5 - If demand is inelastic, will shifts in supply have...Ch. 5 - If supply is elastic, will shifts in demand have a...Ch. 5 - If supply is inelastic, will shifts in demand have...Ch. 5 - Would you usually expect elasticity of demand or...Ch. 5 - Under which circumstances does line tax burden...Ch. 5 - What is the formula for the income elasticity of...Ch. 5 - What is the formula for line cross-price...Ch. 5 - What is the formula for the wage elasticity of...Ch. 5 - What is the formula for elasticity of savings with...Ch. 5 - Transatlantic air travel in business class has an...Ch. 5 - What is the relationship between price elasticity...Ch. 5 - Can you think of an industry (or product) with...Ch. 5 - Would you expect supply to play a more significant...Ch. 5 - A city has build a bridge over a river and it...Ch. 5 - In a market where the supply curve is perfectly...Ch. 5 - Economists define normal goods as having a...Ch. 5 - Suppose you could buy shoes one at a time, miter...Ch. 5 - The equation for a demand curve is P=483Q. What is...Ch. 5 - The equation for a demand curve is P=2/Q. What is...Ch. 5 - The equation for a supply curve is 4P=Q. What is...Ch. 5 - The equation for a supply curve is P=3Q8. What is...Ch. 5 - The supply of paintings by Leonardo Da Vinci, who...Ch. 5 - Say that a certain stadium for professional...Ch. 5 - When someones kidneys fail, the person needs to...Ch. 5 - Assume that the supply of law-skilled worker is...
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- 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)arrow_forwardThe 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_forward
- Plentilandia 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_forwardUsing the fundamental equation of the asset approach to exchange rates for two countries, Home and Foreign, show graphically and explain the effect on expected rate of return on Home and Foreign deposits and on the spot exchange rate if the interest rate on Foreign deposits remains unchanged, Home interest rate decreases, and the expected exchange rate is unchanged.arrow_forwardStarting with the equilibrium in the IS-LM-FX model show graphically and explain the effects on interest rate, output and exchange rate of a temporary expansionary fiscal policy. Assume a floating exchange rate.arrow_forward
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