Econ assignments

B) the price of the product.

A change in all of the following variables will change the market demand for a product except A) tastes. B) the price of the product. C) population and demographics. D) income.

d. at least $125,000

Arlene quits her $125,00-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? a. It depends on the "going rate" for home-care providers b. The value she attributes to the satisfaction she receives from taking care of her parents c. zero, since she will no longer be earning a salary d. at least $125,000

B) The quantity demanded of the related good rises by 34 percent.

The cross-price elasticity between Gillette razors and a related good is -3.4. What happens to the demand for the related good if the price of Gillette razors falls by 10 percent? A) The quantity demanded of the related good falls by 3.4 percent. B) The quantity demanded of the related good rises by 34 percent. C) The quantity demanded of the related good falls by 34 percent. D) The quantity demanded of the related good rises by 3.4 percent.

A) the marginal social cost of producing a good or service exceeds the private cost.

A negative externality exists if A) the marginal social cost of producing a good or service exceeds the private cost. B) the marginal private cost of producing a good or service exceeds the social cost. C) there are price controls in a market. D) there are quantity controls in a market.

c. the marginal social cost of producing a good or service exceeds the private cost

A negative externality exists if a. the marginal private cost of producing a good or service exceeds the social cost b. there are quantity controls in a market c. the marginal social cost of producing a good or service exceeds the private cost d. there are price controls in a market

A) increasing opportunity costs as more and more of one good is produced.

A production possibilities frontier with a bowed-outward shape indicates A) increasing opportunity costs as more and more of one good is produced. B) decreasing opportunity costs as more and more of one good is produced. C) constant opportunity costs as more and more of one good is produced. D) the possibility of inefficient production.

B) inelastic.

According to an article in the Wall Street Journal, unlike airlines, even elite hotels don't have sophisticated systems that can react quickly to changes in demand. Even if they could, many hoteliers say people don't respond that much to lower rates. "We've tested this, cutting our rates by $50 [per night], and we didn't see an appreciable response in occupancy," says Jim Schultenover, a vice president for Ritz-Carlton. Based on the information above, the demand for hotel rooms is A) elastic. B) inelastic. C) perfectly elastic. D) unit elastic.

C) what will be produced; how something will be produced

Allocative efficiency best explains ________, and productive efficiency best explains ________. A) when something will be produced; why something will be produced B) why something will be produced; what will be produced C) what will be produced; how something will be produced D) how something will be produced; when something will be produced

B) a benefit or cost experienced by someone who is not a producer or consumer of a good or service.

An externality is A) a cost paid for by the producer of a good or service. B) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. C) a benefit realized by the purchaser of a good or service. D) anything that is external or not relevant to the production of a good or service.

b. 0.5

Calculate the income elasticity if an 8% increase in income leads to a 4% increase in quantity demanded for organic produce a. -0.66 b. 0.5 c. 1.5 d. 2

A) unlike public goods, common resources are rival in consumption.

Common resources differ from public goods in that A) unlike public goods, common resources are rival in consumption. B) common resources are collectively owned by a group of people while public goods are government owned. C) common resources are nonexcludable while public goods are excludable to those who do not pay for the good. D) common resources are resources that cannot be renewed but the production of public goods can be increased any time

A) 3/8 of a pound of cashews

Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. Refer to Figure 2-9. What is the opportunity cost of producing 1 bolt of cotton in Indonesia? A) 3/8 of a pound of cashews B) 5/8 of a pound of cashews C) 2 2/3 pounds of cashews D) 120 pounds of cashews

C) People respond to economic incentives.

Ford assembles some cars in Mexico because the lower wages the company pays to Mexican workers and the lower prices it pays for auto parts in Mexico reduces Ford's costs. This is an example of Ford reacting to which of the three key economic ideas? A) Optimal decisions are made at the margin. B) People are rational. C) People respond to economic incentives. D) Firms attempt to maximize revenues.

C) 1/3 of a unicycle

Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. What is Fred's opportunity cost of making a pogo stick? A) 1/2 of a unicycle B) 6/7 of a pogo stick C) 1/3 of a unicycle D) 3 unicycles

C) surplus of 40,000 units of labor.

Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. Refer to Table 4-4. If a minimum wage of $11.50 is mandated, there will be a A) surplus of 20,000 units of labor. B) shortage of 40,000 units of labor. C) surplus of 40,000 units of labor. D) shortage of 20,000 units of labor

D) The demand curve for traditional cameras shifts to the left.

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras? A) The supply curve for traditional cameras shifts to the right. B) The supply curve for traditional cameras shifts to the left. C) The demand curve for traditional cameras shifts to the right. D) The demand curve for traditional cameras shifts to the left.

A) planting trees along a sidewalk which add beauty and create shade

Which of the following is an example of a positive externality? A) planting trees along a sidewalk which add beauty and create shade B) a police department stops enforcing DUI laws C) permitting smoking on commercial airplanes D) raising the speed limit to 60 mph in school zones

D) $1,000 in cash

Which of the following is not a factor of production? A) a drill press in a machine shop B) an acre of farmland C) the manager of the local tire shop D) $1,000 in cash

C) whether or not consumers will buy its products

Which of the following is not an example of an economic trade-off that a firm has to face? A) whether it is to outsource the production of a good or service B) whether it is cheaper to produce with more machines or with more workers C) whether or not consumers will buy its products D) whether it should produce more of its product

False

Write 'T' if the statement is true and 'F' if the statement is false. Optimal decisions are made at the point where marginal cost equals zero.

a. microeconomic b. macroeconomic c. macroeconomic d. microeconomic e. microeconomic f. macroeconomic

Write 'T' if the statement is true and 'F' if the statement is false. When voluntary exchange takes place, both parties gain from the exchange.

true

Write 'T' if the statement is true and 'F' if the statement is false. When voluntary exchange takes place, both parties gain from the exchange.

A) can produce more of something than others with the same resources.

You have an absolute advantage whenever you A) can produce more of something than others with the same resources. B) are better educated than someone else. C) prefer to do one particular activity. D) can produce something at a lower opportunity cost than others.

D) Productive efficiency

________ is a situation in which a good or service is produced at the lowest possible cost. A) Allocative efficiency B) Optimal marginalism C) Equity D) Productive efficiency

D) must be set below the equilibrium price.

To affect the market outcome, a price ceiling A) must be set below the black market price. B) must be set below the price floor. C) must be set below the legal price. D) must be set below the equilibrium price.

B) substitutes.

Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are A) both luxury goods. B) substitutes. C) complements. D) both inferior goods.

True

True/False A quasi-public good is similar to a public good in that one person's consumption of the quasi-public good does not reduce the amount available for everyone else

The highest-valued alternative that must be given up to engage in an activity

What is opportunity cost?

B) it forces the polluting producer to internalize the social cost of the pollution.

An advantage of imposing a tax on the producer that generates pollution is that A) a producer can pass the cost of the pollution to consumers. B) it forces the polluting producer to internalize the social cost of the pollution. C) the government can keep tabs on exactly what is produced in an industry. D) it will eliminate pollution.

D) at least $125,000

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? A) It depends on the "going rate" for home-care providers. B) the value she attributes to the satisfaction she receives from taking care of her parents C) zero, since she will no longer be earning a salary D) at least $125,000

C) perfectly inelastic.

At a price of $8 per dozen, Chuy sells 40 dozen homemade tamales per week. When he raised his price to $12 per dozen, he still sold 40 dozen per week. Based on this information, the demand for his tamales is A) inelastic. B) unit elastic. C) perfectly inelastic. D) perfectly elastic.

False

False TRUE/FALSE In the circular flow model, households demand resources such as labor services in the factor market.

C) a smaller quantity of GPS systems supplied.

A decrease in the price of GPS systems will result in A) a larger quantity of GPS systems supplied. B) an increase in the supply of GPS systems. C) a smaller quantity of GPS systems supplied. D) a decrease in the demand for GPS systems.

A) public goods

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? A) public goods B) private goods C) quasi-public goods D) common resources

C) Yes, there is often a trade-off between efficiency and equity.

Article Summary In a January, 2017 report, the World Economic Forum stated that the growing income gap has become one of the biggest threats to the global economy and cannot be remedied solely by higher economic growth. Although income inequality has fallen over the past 30 years on a global level, in high-income countries like the United States and the United Kingdom, the top 1% of income earners have benefitted disproportionately from economic growth. This has led a growing belief that the traditional model for economic growth does not result in a population-wide increase in income. According to the report, "The growing mood of anti-establishment populism suggests we may have passed the stage where [reviving economic growth] alone would remedy fractures in society: reforming market capitalism must also be added to the agenda." -Refer to the Article Summary. The article discusses income inequality and how economic growth alone is no longer resulting in a more equitable distribution of income. If governments increased equity by reducing the incomes of high-income people and increasing the incomes of the poor, would it be possible that fewer goods and services would be produced and less saving would take place? A) No, greater production and saving will take place regardless of the level of equity. B) No, an increase in equity will result in a more efficient level of production and saving. C) Yes, there is often a trade-off between efficiency and equity. D) Yes, a reduction of the income gap necessitates a reduction in production and saving.

What is the difference between an "increase in demand" and an "increase in quantity demanded"? A) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. B) There is no difference between the two terms; they both refer to a shift of the demand curve. C) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. D) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

D) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

Paul goes to Dick's Sporting Goods to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is A)$325. B)$200. C)$125. D)$75.

D)$75.

Productive efficiency is a situation in which a good or service is produced at the lowest possible cost. No, recuasse a firm may be productive efficient and produce goods efficiently but if they aren't allocated then theres no point in being productively efficient.

Define productive efficiency. Does productive efficiency imply allocative efficiency? Explain.

The tragedy of the commons is the situation where common resources are subject to overuse & pollution. Ex: forest land, public library, public beach They are subject to overuse bc each individuals capture the private benefit fully but only includes part of cost. Each individual has no incentive to maintain the quality of the resource

Define the tragedy of the commons. Give three examples of common resources. Briefly explain why common property resources are subject to overuse

a. Rivalry & non excludable b. Excludable & non-rivalry c. Excludable & non-rival d. non-rival & non-excludable e. excludable & non-rival

Determine if each of the products below displays any of the following characteristics: (i) rivalry (ii) nonrivalry (iii) excludability (iv) nonexcludability a. a freeway during peak commute hours b. an online college course c. infectious disease prevention d. open source software such as Linux e. a movie showing at Century Theatres

C) portray reality in all its minute details.

Economic models do all of the following except A) make economic ideas explicit and concrete for use by decision makers. B) simplify some aspect of economic life. C) portray reality in all its minute details. D) answer economic questions.

B) marginal benefit equals the marginal cost.

Economists reason that the optimal decision is to continue any activity up to the point where the A) marginal cost is zero. B) marginal benefit equals the marginal cost. C) marginal benefit is zero. D) marginal benefit is greater than the marginal cost

Change in supply is an entire shift of the curve to the left or right, caused by new methods of production Change in quantity supplied is a change in the offered for sale, caused by change in price Its movement is along the curve

Explain the differences between a change in supply and a change in quantity supplied

B) is the result of advancements in plastic production technology.

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from Y to Z A) is the result of a decrease in preference for food products. B) is the result of advancements in plastic production technology. C) is the result of advancements in food production technology. D) represents an increase in the demand for plastic products.

D) people consume a pure public good without payment, even though the good may not be produced if no one chooses to pay.

Free riding refers to a situation in which A) high income individuals subsidize the production of goods, such as education, that make society better off .B) markets fail to allocate resources efficiently when benefits outweigh costs. C) the marginal cost of allowing additional consumers to consume a public good is zero. D) people consume a pure public good without payment, even though the good may not be produced if no one chooses to pay.

D) a decrease in the quantity of MP3 players demanded.

Holding everything else constant, an increase in the price of MP3 players will result in A) a decrease in the quantity of MP3 players supplied. B) an increase in the supply of MP3 players C) a decrease in the demand for MP3 players. D) a decrease in the quantity of MP3 players demanded.

a. product market b. factor market c. factor market d. factor market

Identify whether each of the following transactions will take place in the factor market or in the product market. a. Graciela buys a Tesla Motors Model X. b. Lashan works 60 hours a week at a law firm. c. Tito sells his family's farmland to a housing developer. d. Tesla Motors increases employment at its Fremont, California plant.

A) will decrease total revenue.

If the demand for a product is perfectly inelastic, a decrease in the price of the product A) will decrease total revenue. B) will increase total revenue. C) will not change total revenue. D) any of the above are possible.

c. $40

If the market price is $40 in a perfectly competitive market, the marginal revenue from selling the fifth unit is a. $8 b. $20 c. $40 d. $200

A) It falls.

If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises? A) It falls. B) It falls by 162 percent. C) It rises. D) It rises by 1.62 percent.

C) elastic.

In 2016, Philadelphia imposed a tax of 1.5 cents per ounce on sweetened beverages, and PepsiCo indicated that its sales in Philadelphia fell by 40 percent after the tax took effect. If the price of PepsiCo's sweetened beverages in Philadelphia increased by 32 percent following the implementation of the tax, then demand for sweetened beverages in Philadelphia would be A) unit elastic. B) perfectly inelastic. C) elastic. D) inelastic.

D) economic benefits are distributed fairly.

In economics, the term "equity" means A) the hardest working individuals consume all they want. B) everyone has an equal standard of living. C) only elected officials have high standards of living. D) economic benefits are distributed fairly.

a. to shut down temporarily or continue to produce

In the short run, a firm that is operating at a loss has two options. These options are a. to shut down temporarily or continue to produce b. to adopt new technology or change the size of its physical plant c. to go out of business or declare bankruptcy d. to reduce output or reduce its variable cost

C) Demand is likely to be relatively inelastic.

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? A) Demand is likely to be relatively elastic. B) Demand is likely to be perfectly elastic. C) Demand is likely to be relatively inelastic. D) Demand is likely to be perfectly inelastic.

B) negative, so Sefton considers potatoes to be an inferior good

Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is A) negative, so Sefton considers potatoes to be a normal good. B) negative, so Sefton considers potatoes to be an inferior good. C) positive, so Sefton considers potatoes to be a normal good and a necessity. D) positive, so Sefton considers potatoes to be an inferior good.

D) the demand for salt is relatively inelastic.

Most people buy salt infrequently and in small quantities. Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded. Therefore A) salt is a normal good. B) the price elasticity of demand for salt is greater than 1 (in absolute value). C) the demand for salt will be perfectly inelastic. D) the demand for salt is relatively inelastic.

C) allocatively efficient.

Mr. Peabody chooses to invest in companies that produce goods and services based on consumer preferences. Mr. Peabody is investing in companies that are attempting to be A) productively efficient. B) guaranteed to make a profit. C) allocatively efficient. D) all of the above

B) vertical; downward sloping

Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________. A) horizontal; downward sloping B) vertical; downward sloping C) downward sloping; vertical D) upward sloping; horizontal

D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)? A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.

D) D2 to D1.

Refer to Figure 3-1. If the product represented is a normal good, a decrease in income would be represented by a movement from A) X to Y. B) Y to X. C) D1 to D2. D) D2 to D1.

D) S2 to S1.

Refer to Figure 3-2. A decrease in productivity would be represented by a movement from A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.

A) there would be a shortage of 600 units.

Refer to Figure 3-4. If the price is $10, A) there would be a shortage of 600 units. B) there would be a surplus of 600 units. C) there would be a shortage of 200 units. D) there would be a surplus of 200 units.

D) Panel (d)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)

A) The equilibrium point will move from A to E.

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change? A) The equilibrium point will move from A to E. B) The equilibrium point will move from A to C. C) The equilibrium will first move from A to B, then return to A. D) The equilibrium point will move from A to B.

B) 63 lbs.

Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be A) 51 lbs. B) 63 lbs. C) 76 lbs D) 146 lbs.

A) Tom will receive $12 of consumer surplus from buying one shirt.

Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars, A) Tom will receive $12 of consumer surplus from buying one shirt. B) Harriet will receive $25 of consumer surplus since she will buy no shirts. C) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. D) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts.

C) 2.69

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand? A) 0.11 B) 0.37 C) 2.69 D) 9.33

A) The supply curve shifts to the right.

Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant? A) The supply curve shifts to the right. B) The supply curve shifts to the left. C) The demand curve shifts to the right. D) The quantity of platinum demanded and the quantity of platinum supplied both increase.

B) $56,500

Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $36,500 B) $56,500 C) $65,500 D) $72,500

True

TRUE/FALSE Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

False

TRUE/FALSE If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods.

True

TRUE/FALSE If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic

False

TRUE/FALSE The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars

False

TRUE/FALSE The total amount of consumer surplus in a market is equal to the area below the demand curve.

A) Haley has a comparative advantage in making bracelets and Serena in making necklaces.

Table 2-6 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-6. Which of the following statements is true? A) Haley has a comparative advantage in making bracelets and Serena in making necklaces. B) Haley has a comparative advantage in making necklaces and Serena in making bracelets. C) Haley has a comparative advantage in making both products. D) Serena has a comparative advantage in making both products.

B) movement from H to J in Graph B.

Tesla opened its Gigafactory near Sparks, Nevada to produce lithium-ion batteries for both its automobiles and its Powerwall energy storage products. Figure 2-7 shows changes to its production possibilities frontier at the Gigafactory in response to new developments and different strategic production decisions. Refer to Figure 2-7. Assume that in response to changing consumer demands, Tesla cuts back on the production of Powerwall batteries and increases its production of automobile batteries. This strategy is best represented by the A) movement from L to K in Graph C. B) movement from H to J in Graph B. C) movement from J to G in Graph B. D) movement from E to F in Graph A.

D) 2/5 of a cappuccino

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake? A) $1.00 B) 2 1/2 cappuccinos C) $2.50 D) 2/5 of a cappuccino

C) the price of a good on a consumer's purchasing power.

The income effect of a price change refers to the impact of a change in A) demand when income changes. B) the quantity demanded when income changes. C) the price of a good on a consumer's purchasing power. D) income on the price of a good.

C) The supply curve for digital photo printing services shifts to the right.

The popularity of digital cameras has enticed large discount stores like Walmart and Costco to offer digital photo printing services. How does the offering of the printing service by Walmart and Costco affect the digital photo printing market? A) The demand curve for digital photo printing services shifts to the left. B) The supply curve for digital photo printing services shifts to the left. C) The supply curve for digital photo printing services shifts to the right. D) The demand curve for digital photo printing services shifts to the right.

A) decrease by 12 percent.

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value). This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to A) decrease by 12 percent. B) decrease by 26 percent. C) decrease by 32 percent. D) decrease by 60 percent.

The difference between the lowest price a firm would be willing to accept for a good or service and the price it actually receives it measures the difference between the price a company actually sells a product for and the minimum amount of money that it would accept for the product

What is producer surplus? What does producer surplus measure?

A price ceiling is a legally determined maximum price that sellers may charge A price floor is is a legally determined minimum price that sellers may receive Price ceilings must be set below the competitive equilibrium price, and price floors must be set above the competitive equilibrium price

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price, where must price ceilings and price floors be set to have an effect on the market?

D) the increase in quantity sold is large enough to offset the lower price.

When demand is elastic, a fall in price causes total revenue to rise because A) the percentage increase in quantity demanded is less than the percentage fall in price B) when price falls, quantity sold increases so total revenue automatically rises C) the demand curve shifts. D) the increase in quantity sold is large enough to offset the lower price.

a. positive b. normative c. normative d. normative e. positive f. normative

Which of the following are positive economic statements and which are normative economic statements? a. An increase in the price of gasoline will decrease the quantity of gasoline purchased. b. The government should eliminate the minimum wage. c. All states should raise the minimum wage to at least $10 per hour. d. The government should scrap its current income tax structure in favor of a flat tax. e. Unemployment has increased since the onset of the recession. f. The government should not bail out investment banks during a financial crisis.

B) What determines the inflation rate?

Which of the following is a macroeconomic question? A) What determines the production of DVDs? B) What determines the inflation rate? C) What determines the wage of auto workers? D) What factors determine the price of carrots?

A) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Which of the following is a normative economic statement? A) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable. B) With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. C) Rising global demand for coal has led to increases in the price of coal. D) The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation.

D) Raising the tax on gasoline raises the selling price of gasoline

Which of the following is a positive economic statement? A) The government should ban the production and sale of incandescent light bulbs. B) The government should revamp its immigration policies. C) U.S. citizens should only buy products which are produced in the United States. D) Raising the tax on gasoline raises the selling price of gasoline

a. Aspirin is higher bc it has close substitutes available, whereas insulin has no close substitutes and is needed no matter the price b. Whirlpool refrigerator has higher elasticity of demand bc there are other refrigerator brands in the market, electricity is needed to run this appliance as well as others c. Soft drinks in general would have higher elasticity of demand bc it has lots of substitutes, Red Bull does not have as many substitutes For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value).

a. Insulin for a diabetic or aspirin for someone suffering a headache. b. A new Whirlpool 27 cu.ft. side-by-side refrigerator or electricity to power your all-electric home. c. A can of Red Bull or soft drinks in general.