Microeconomics 8th Global Edition Jeffrey Perloff - Solutions

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Why are wage rates higher in one competitive labor market than in another? In short, why do wage rates differ?
If the absolute (or money) price of good A is $$40$ and the absolute price of good B is $$60,$ what is the relative price of each good?
If more people want to move from California to Texas than want to move from Texas to California, might U-Haul rates reflect this difference? Explain your answer.
Why might median house prices be higher in one city than in another?
If a subsidy is provided for the consumption of good X, and the subsidy is different for different units of good X (e.g.,$$40$ subsidy on the first unit of good X and $$32$ on the second unit of good X, etc.), would the demand curve without a subsidy be parallel to the demand curve with a
Suppose a subsidy is provided to the buyers of solar panels. What is likely to happen to the price of solar panels? Explain your answer.
The demand rises for admission to a university, but both the tuition and the number of openings in the entering class remain the same. Will this change affect the admission standards of the university? Explain your answer.
Administrators and faculty at state colleges and universities often say that their standards of admission are independent of whether there is a shortage or surplus of openings at the university. Do you think that this statement is true? Do you think that faculty and administrators ignore surpluses
Suppose food insurance exists. You pay the food insurance company a certain dollar amount each month, and then you purchase all the food you want from your local grocery store. The grocery store sends the bill to your food insurance company. What will happen to the price of food and to the premium
In Exhibit 4(a), suppose that the price a person has to pay for medical care is between P1 and zero. Where would the demand for X-rays in panel(b) be in relationship to D1 and D2?
Give an example to illustrate that someone may “pay” for clean air in much the same way that she “pays” for good weather.
If the equilibrium price is $$400$ for an aisle seat and $$350$ for a middle seat but an airlines company charges $$350$ for each seat, we would expect a shortage to appear in the aisle seat market. (More people will want aisle seats than there are aisle seats available.) How will the
Suppose the supply of aisle, middle, and window seats is each 100 seats but the demand for aisle seats is greater than the demand for window seats, which, in turn, is greater than the demand for middle seats. If the equilibrium price of an aisle seat is $300, where do the equilibrium prices of
University X is a large school with a major football team.A new field house and track were just added to the campus.How is this addition related to the discussion in this application?
Sometimes it is argued that, if colleges paid student athletes, the demand for college sports would decline. In other words, the demand for college sports is as high as it is because student athletes are not paid (in the same way that professional athletes are paid). How would the analysis in this
If lowering lending standards can indirectly raise housing prices, can increasing lending standards lower housing prices? Explain.
Suppose anyone who buys a house in a certain year gets to pay $$1,000$ less in income taxes (assuming that the tax owed is greater than $$1,000).$ Would the tax credit affect house prices? Explain your answer.
Speculators can benefit themselves and others at the same time. Do you agree or disagree with this statement? Explain your answer with an example.
The price of a given good is likely to be less variable with than without speculators. Explain.
In Exhibit 8, at what price is there a surplus of freeway space at 8 a.m.?
Explain why subsidizing the purchase of good X could end up raising the price of good X.
Explain diagrammatically why a good whose consumption is subsidized is likely to sell for a higher price than a good whose consumption is not subsidized.
On Tuesday, the price and quantity demanded are $$7$ and 120 units, respectively. Ten days later, the price and quantity demanded are $$6$ and 150 units, respectively. What is the price elasticity of demand between the $$7$ and $$6$ prices?
What does a price elasticity of demand of 0.39 mean?
Identify what happens to total revenue as a result of each of the following:a. Price rises and demand is elastic.b. Price falls and demand is inelastic.c. Price rises and demand is unit elastic.d. Price rises and demand is inelastic.e. Price falls and demand is elastic.
Alexi says, “When a seller raises his price, his total revenue rises.” What is Alexi implicitly assuming?
If good X has 7 substitutes and demand is inelastic, then if there are 9 substitutes for good X, will demand be elastic? Explain your answer.
Price elasticity of demand is predicted to be higher for which good of the following combinations of goods?a. Dell computers or computersb. Heinz ketchup or ketchupc. Perrier water or water Explain your answers.
What does an income elasticity of demand of 1.33 mean?
What does perfectly inelastic supply signify?
Why will government raise more tax revenue if it applies a tax to a good with inelastic demand than if it applies the tax to a good with elastic demand?
Under what condition would a per-unit tax placed on the sellers of computers be fully paid by the buyers of computers?
• Statement 1: Businesses always want to sell their products at higher prices, this way they take in greater revenue.• Statement 2: If wages go up on average then the workers, the people who earn the wages, will, as a group, earn a greater income.Hear what and how the economist thinks:This is
State and solve the diamond–water paradox.
What does falling total utility imply for marginal utility? Give an arithmetical example to illustrate your answer.
When would a good’s total utility and marginal utility be the same?
Alessandro purchases two goods, X and Y, and the utility gained for the last unit purchased of each is 16 utils and 23 utils, respectively. The prices of X and Y are $$1$ and $$1.75,$ respectively. Is Alessandro in consumer equilibrium? Explain your answer.
In a two-good world (goods A and B), what does it mean to be in consumer disequilibrium?
Brandon’s grandmother is very cautious about spending money. Yesterday, she gave Brandon a gift of $$100$ for his birthday. Brandon also received a gift of $$100$ from his father, who isn’t nearly as cautious about spending money as Brandon’s grandmother is. Brandon believes that buying
Summarize David Friedman’s explanation of the endowment effect.
The town adjacent to my own has just implemented tighter pollution standards. It turns out that, as a result, the air quality is better in that town than in the town I live in. I think that people moving into the area are going to prefer to live in the town with better air than in my town.Hear what
Will individuals form teams or firms in all settings?
Suppose everything about two people is the same except that currently one person earns a high salary and the other person earns a low salary. Which person is more likely to start his or her own business and why?
Is accounting profit or economic profit larger? Why?
When can a business owner be earning a profit but not covering costs?
If the short run is six months, does it follow that the long run is longer than six months? Explain your answer.
“As we add more capital to more labor, eventually the law of diminishing marginal returns will set in.” What is wrong with this statement?
Suppose an MC curve falls when output is in the range from 1 unit to 10 units. Then it flattens out and remains constant over an output range from 10 units to 20 units, after which it rises over a range from 20 units to 30 units. What does the curve’s behavior have to say about the MPP of the
Identify two ways to compute average total cost (ATC ).
Would a business ever sell its product for less than cost? Explain your answer.
What happens to unit costs as marginal costs rise? Explain your answer.
Do changes in MPP influence unit costs? Explain your answer.
What would the LRATC curve look like if there were always constant returns to scale? Explain your answer.
Firm A charged $$4$ per unit when it produced 100 units of good X, and it charged $$3$ per unit when it produced 200 units. Furthermore, the firm earned the same profit per unit in both cases. How can this happen?
The economist hears someone say:Business firms are all about maximizing revenue. If a firm is currently earning $$10$ million in total revenue, and it can sell 10 more units of whatever it is that it sells—thus raising the total revenue to $$10$ million and $$100—then$ it should do that:
When would total costs equal fixed costs?
When will total cost equal total variable cost?
The United States is losing jobs manufacturing jobs to other countries. The number of manufacturing jobs has fallen in the United States in recent years. If the current trend in manufacturing jobs continues, the day will soon come in the United States when Americans produce no manufactured goods.
As Sandi’s income rises, her demand for popcorn rises. As Mark’s income falls, his demand for prepaid telephone cards rises. What kinds of goods are popcorn for Sandi and telephone cards for Mark?
Why are demand curves downward sloping?
Give an example that illustrates how to derive a market demand curve.
What factors can change demand? What factors can change quantity demanded?
What would the supply curve for houses (in a given city) look like for a period of (a) the next 10 hours and (b) the next three months?
What happens to the supply curve if each of the following occurs?a. The number of sellers decreases.b. A per-unit tax is placed on the production of a good.c. The price of a relevant resource falls.
“If the price of apples rises, the supply of apples will rise.” True or false? Explain your answer.
When a persown goes to the grocery store to buy food, there is no auctioneer calling out prices for bread, milk, and other items. Therefore, supply and demand cannot be operative.Do you agree or disagree? Explain your answer.
The price of a personal computer of a given quality is lower today than it was five years ago. Is this necessarily the result of a lower demand for computers? Explain your answer.
What is the effect on equilibrium price and quantity of the following?a. A decrease in demand that is greater than the increase in supplyb. An increase in supplyc. A decrease in supply that is greater than the increase in demandd. A decrease in demand
At equilibrium quantity, what is the relationship between the maximum buying price and the minimum selling price?
If the price paid for a certain item is $$40$ and the consumers’ surplus is $$4,$ then what is the maximum buying price for that item? If the minimum selling price is $$30$ and the producers’ surplus is $$4,$ then what is the price received by the seller?
It seems to me that the law of demand has to be wrong in some cases. There are plenty of examples of the price of a good rising and people buying more of the good. For example, during the period 2000–2006, house prices were rising (sometimes quite rapidly) in the United States and all you heard
There are two sides to a market—a buying or demand side and a selling or supply side. Since most of us buy many more goods and services than we sell, let’s consider the price a buyer pays for a good or service.There are two kinds of prices—equilibrium prices and disequilibrium prices. If
Consumers’ surplus is the difference between the maximum buying price and the price paid.If you’d be willing to pay a maximum of $$10$ for good X, but you pay only $$4$ for the good, then your consumers’ surplus is $$6.Now,$ suppose you receive $$10$ consumers surplus on the first
What is the difference between a movement factor and a shift factor?
The price of good X is higher in year 2 than in year 1 and people are buying more of good X in year 2 than year
Obviously, the law of demand does not hold. Do you agree or disagree? Explain your answer.
Why is there a need for a rationing device, whether it is price or something else?
If price is not the rationing device used, then individuals won’t have as sharp an incentive to produce. Explain.
Do buyers prefer lower prices to higher prices?
“When there are long-lasting shortages, there are long lines of people waiting to buy goods. It follows that the shortages cause the long lines.” Do you agree or disagree? Explain your answer.
Who might argue for a price ceiling? A price floor?
Someone says, “The price of good X has risen, so good X is more expensive than it used to be.” In what sense is this statement correct? In what sense is this statement either incorrect or misleading?
The government has today imposed a price ceiling on gasoline purchased at the pump. As one member of Congress said, “It was done to keep gasoline prices within the reach of the poor and the middle-class. It was also done to make our money more valuable.”When asked how a price ceiling made
Represent the following data in bar graph form. Year U.S. Money Supply ($ billions) 2012 2,458 2013 2,641 2014 2,924 2015 3,079 2016 3,278
What does a straight-line PPF represent? What does a bowed-outward PPF represent?
What does the law of increasing costs have to do with a bowed-outward PPF?
A politician says, “If you elect me, we can get more of everything we want.” Under what condition is the politician telling the truth?
In an economy, only one combination of goods is productive efficient. True or false? Explain your answer.
True or false? Scarcity is the condition of finite resources. Explain your answer.
How does competition arise out of scarcity?
How does choice arise out of scarcity?
Give an example to illustrate how a change in opportunity cost can affect behavior.
Studying has both costs and benefits. If you continue to study (e.g., for a test) for as long as the marginal benefits of studying are greater than the marginal costs, and you stop studying when the two are equal, will your action be consistent with having maximized the net benefits of studying?
You stay up an additional hour to study for a test. The intended effect is to raise your test grade. What might be an unintended effect of staying up another hour to study?
What is the purpose of building a theory?
Your economics instructor says, “If the price of going to the movies goes down, people will go to the movies more often.”A student in class says, “Not if the quality of the movies goes down.” Who is right, the economics instructor or the student?
First person says: “People are always advancing theories to explain this or that. They advance theories to explain things like the climate, crime, rising unemployment, poverty, and so much more. I only accept those theories that sound reasonable or right to me. “Second person says: “I agree.
Why is it important to test a theory? Why not simply accept a theory if it sounds right?
Jen's utility function with respect to wealth is $U(W)=\sqrt{W}$. Plot this utility function and illustrate in your figure why Jen is risk averse.
In Question 1.3, you paid €850 to purchase stock in a company on the advice of your financial advisor. Now suppose you are risk-averse and have the concave utility function $U(W)=\sqrt{W}$, where $W$ is wealth, and it is equally likely that the stock will not do as well. Its value will be

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Microeconomics 8th Global Edition Jeffrey Perloff - Solutions

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