Questions and Answers of Economics Today The Macro View

Suppose that in a recent market period, the following relationship existed between the price of tablet devices and the quantity supplied and quantity demanded.Graph the supply and demand curves for
Suppose that in a later market period, the quantities supplied in the table in Problem 3-1 are unchanged.The amount demanded, however, has increased by 30 million at each price. Construct the
Consider the market for cable-based Internet access service, which is a normal good. Explain whether the following events would cause an increase or a decrease in demand or an increase or a decrease
In the market for wireless earbuds (a normal good), explain whether the following events would cause an increase or a decrease in demand or an increase or a decrease in the quantity demanded.Also
Listed below are some changes in (shifts in)demand for various items. In each case, the change in demand has been caused by a change in the price of a substitute or of a complement. Explain whether
In Figure 3-2, what are the effects of a price decrease from $4 per wireless earbud to $2 per wireless earbud on the quantities of wireless earbuds demanded by buyer 1 and by buyer 2 individually and
In Figure 3-2, what are the effects of a price increase from $1 per wireless earbud to $3 per wireless earbud on the quantities demanded by buyer 1 and by buyer 2 individually and combined?Figure 3-2
In Figure 3-4, the current position of the demand curve is D1, and the price of a wireless earbud is $3.If there is an increase in the price of tablet devices that are complements to wireless
In Figure 3-4, the current position of the demand curve is D1, and the price of a wireless earbud, which is a normal good, is $3. If there is an increase in consumer incomes, will the demand curve
In Figure 3-7, what are the effects of a price decrease from $5 per wireless earbud to $3 per wireless earbud on the quantities supplied by supplier 1 and by supplier 2 individually and
In Figure 3-7, what are the effects of a price increase from $2 per wireless earbud to $4 per wireless earbud on the quantities supplied by supplier 1 and by supplier 2 individually and
In Figure 3-9, the current position o f the supply curve is S1, and the price of a wireless earbud is $3.If supplier s anticipate a higher price of wireless earbuds in the future, will the supply
In Figure 3- 9, the current position of the supply curve is S1, and the price of a wireless earbud is $3.If the cos t of inputs that suppliers utilize to produce wireless earbud s decrease s, will
In recent years, technological improvements have greatly reduced the costs of producing smartphones, and a number of new firms have entered the smartphone industry. At the same time, prices of
Advances in research and development in the pharmaceutical industry have enabled manufacturers to identify potential cures more quickly and therefore at lower cost. At the same time, the aging of our
Consider the information in Problem 4-9 and your answers to that problem. Suppose that the market clearing price of Pakistani wheat in the absence of price supports is equal to $0.10 per kilogram. At
A city has decided to impose rent controls, and it has established a rent ceiling below the previous equilibrium rental rate for offices throughout the city. How will the quantity of offices leased
The government of the state of Arizona decided to boost its own minimum wage by an additional $1.60 per hour above the minimum wage established by the federal government. This pushed the wage rate
Consider Figure 4-1. The current demand and supply curves are D1, and S1, at which the equilibrium price and quantity are P1 and Q1. If firms adopt a cost-reducing technique for producing this good,
Suppose that in Figure 4-4, the government raises the floor price of peanuts above the displayed $500-per-ton floor price, to $600 per ton. Will the excess quantity of peanuts supplied increase or
Suppose that in Figure 4-4, the government reduces the floor price of peanuts below the displayed $500-per-ton floor price, to $400 per ton. Will the excess quantity of peanuts supplied increase or
Many people who do not smoke cigars are bothered by the odor of cigar smoke. If private contracting is impossible, will too many or too few cigars be produced and consumed? Taking all costs into
Draw a diagram of the market for oranges. Explain how the government policy you discussed in part (b) of Problem 5-2 is likely to affect the market price and equilibrium quantity in the orange
Draw a diagram of this nation's market for auto- mobiles, which are a substitute for buses. Explain how the government policy you discussed in part (b) of Problem 5-5 is likely to affect the market
After a government implements a voucher pro- gram, granting funds that families can spend at schools of their choice, numerous students in public schools switch to private schools. The program's
Based on your answer to Problem 5-17, if Pennsylvania's government aims to correct the steel market's negative externality via an effluent fee, is the appropriate fee higher or lower now that steel
Based on your answer to Problem 5-19, if the government aims to correct the positive externality in the inoculation market via a per-unit subsidy to consumers, in the wake of the study, is the
In Problem 6-10, what was the individual's marginal state income tax rate in 2018? Did this individual experience proportional, progressive, or regressive taxation? Explain briefly.Problem
An individual's income rises from $80,000 per year to $84,000 per year, and as a consequence the per- son's purchases of movie downloads rise from 48 per year to 72 per year. What is this
Assume that the income elasticity of demand for hot dogs is -1.25 and that the income elasticity of demand for lobster is 1.25. What will happen to each good's demand curve as income goes up?
Return to Problem 20-4. Suppose that the price of cheeseburgers falls to $1. Determine the new utility-maximizing combination of cheeseburgers and french fries.Problem 20-4From the data in Problem
You determine that your daily consumption of soft drinks is 3 and your daily consumption of tacos is 4 when the prices per unit are 50 cents and $1, respectively. Explain what happens to your
Refer to the third table for a different consumer, and assume that each week this consumer buys only weekly subscriptions to economic statistics apps and subscriptions to office productivity apps.
Take a look at Table 20-1. Suppose that the price of each digital app rises to $5.97. At the same time, the price of each wireless earbud falls to $2.70. Income remains unchanged at $26. Rework the
At the optimal quantities of digital apps and wire- less earbuds determined in your answer to Problem 20-21, after rounding to the nearest 10 cents, is the $26 income all spent at the new consumer
The short-run production function for a manufacturer of wireless earbuds is shown in the table below. Based on this information, answer the following questions.a. Calculate the average product at
During the past year, a firm produced 10,000 lap- top computers. Its total costs were $5 million, and its fixed costs were $2 million. What are the aver- age variable costs of this firm?
For the firm discussed in Problem 22-4, the total cost of producing 249 units was $12,425. What was the marginal cost incurred by the firm in producing the final tablet device that month?Problem
The cost structure of a manufacturer of micro- chips is described in the table that follows. The firm's fixed costs equal $10,000 per day. Calculate the average variable cost, average fixed cost, and
The diagram displays short-run cost curves for a facility that produces liquid crystal display (LCD) screens for cell phones: Costs (dollars per LCD screen) 10.101 10.07 10 0 99 100 Output (LCD
In the short run, a firm's total costs of producing 100 units of output equal $10,000. If it produces one more unit, its total costs will increase to $10,150.a. What is the marginal cost of producing
In Problem 22-20, if the firm were to employ the 8th unit of labor and produce 380 units of output, what would be the average variable cost and the marginal cost?Problem 22-20Consider Figure 22-3. If
The table represents the hourly output and cost structure for a local pizzeria. The market is perfectly competitive, and the market price of a pizza in the area is $10. Total costs include all
Consider the information provided in Problem 23-4. Suppose the market price drops to only $5 per pizza. In the short run, should this pizzeria continue to make pizzas, or will it maximize its
Consider the firm discussed in Problem 23-13. If the firm were to produce the 12th unit and thereby incur hourly total costs of $65, what would be its marginal cost? Based on this answer and your
The marginal revenue curve of a monopoly crosses its marginal cost curve at $30 per unit and an output of 2 million units. The price that con- sumers are willing to pay for this output is $40 per
Consider the revenue and cost conditions for a monopolist that are depicted in the second figure.a. If price exceeds AVC, what is this producer's profit-maximizing (or loss-minimizing) output?b. What
For each of the following examples, explain how and why a monopoly would try to price discriminate.a. Air transport for businesspeople and touristsb. Serving food on weekdays to businesspeople and
Consider the information from Problem 24-13. If the total costs of producing 13 units were equal to $72.70 per week, would the marginal revenue of producing the 13th unit be greater or less than the
Suppose that initially the data in Problem 24-17 apply, but then an increase in fixed costs occurs. As a result, the ATC curve in Figure 24-6 shifts upward. Consequently, the average total cost of
Consider the diagram depicting the demand and cost conditions faced by a monopolistically com- petitive firm.a. What are the total revenues, total costs, and economic profits experienced by this
In a perfectly competitive market, price equals marginal cost, but this condition is not satisfied for the firm with the revenue and cost conditions depicted in Problem 25-2. In the long run, what
Based on your answer to Problem 25-3, is the firm with the revenue and cost conditions depicted in Problem 25-2 charging a price in excess of the minimum price necessary to induce it to provide this
Calculate total average costs for the bookstore in Problem 25-5. Illustrate the store's short-run equilibrium by calculating demand, marginal revenue, average total costs, and marginal costs. What is
Suppose that after long-run adjustments take place in the used-book market, the business in Problem 25-5 ends up producing 4 units of output. What are the market price and economic profits of this
A firm sells all of its e-books relating to do-it- yourself topics (home plumbing, gardening, and the like) at the same price. At present, the com- pany can earn a maximum annual profit of $25,000
Suppose that the distribution of sales within an industry is as shown in the first table.a. What is the four-firm concentration ratio for this industry?b. What is the eight-firm concentration ratio
The second table shows recent worldwide market shares of producers of inkjet printers.a. In this year, what was the four-firm concentration ratio in the inkjet-printer industry?b. In this year, what
If there are 13 "All others" in the industry in Problem 26-1, each of which has a share of sales equal to 1 percent, what is the value of the Herfindahl- Hirschman Index for this industry?Problem
What is the approximate value of the industry's Herfindahl-Hirschman Index in Problem 26-2?Problem 26-2The second table shows recent worldwide market shares of producers of inkjet printers.a. In this
Take a look back at the data regarding the inkjet- printer industry in Problem 26-2, and answer the following questions.a. Suppose that consumer demands for inkjet printers, the prices of which are
In Problem 26-14, what is the value of the Herfindahl- Hirschman Index?Problem 26-14Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 35
Suppose that a firm located in Cleveland, Ohio, has entered the same industry as the Dallas company discussed in Problem 26-14. The new firm captures a 5 percent market share, and the market share of
The new firm captures a 5 percent market share, and the market share of one of the smallest three original incum- bents declines to 5 percent as well. After the Cleveland firm's entry into the
The table below depicts the cost and demand structure a natural monopoly faces.a. Calculate total revenues, marginal revenue, and marginal cost at each output level. If this firm is allowed to
Do you think that the regulation described in Problem 27-6 is more likely an example of the capture hypothesis or the share-the-gains, share- the-pains theory? Why?Problem 27-6Research into
Several years ago, the U.S. government created a "Do Not Call Registry" and forbade marketing firms from calling people who placed their names on this list. Today, an increasing number of com- panies
Consider the following fictitious sales data (in thousands of dollars) for both e-books and physi- cal books. Firms have numbers instead of names, and Firm 1 generates only e-book sales. Suppose that
Consider the data from Problem 27-11. Suppose that antitrust authorities have determined that there are separate relevant markets for e-books and physical books. In addition, these authorities
Consider the data from Problem 27-11. Suppose that antitrust authorities have determined that the relevant market includes both e-books and physical books. These authorities perceive that a monopoly
A firm that sells both Internet-security software and computer antivirus software will sell the anti- virus software as a stand-alone product. It will only sell the Internet-security software to
The first table depicts the output of a firm that manufactures wireless earbuds. The earbuds sell for $3 each.Calculate the marginal product and marginal rev- enue product at each input level above
Explain how the following events would affect the demand for labor.a. A new education program administered by the company increases labor's marginal product.b. The firm completes a new plant with a
Since the beginning of this century, there has been a significant increase in the price of corn-based ethanol.a. A key input in the production of corn-based ethanol is corn. Use an appropriate
The current market wage rate is $30, the rental rate of land is $1,000 per unit, and the price per service unit of capital is $500. A firm's managers find that under their current allocation of
Consider Figure 28-1, and suppose that the firm is contemplating 14 units of labor, and it knows that doing so would cause its total product to increase to 4,075 units. What would be the resulting
Given the information in Problem 28-17, how much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage W =
Suppose that a nation has implemented a system for applying a tax rate of 2 percent to the incomes earned by the 10 percent of its residents with the highest incomes. All funds collected are then
Estimates indicate that in recent years, the poorest 40 percent of the population earned about 15 per- cent of total income in Argentina. In Brazil, the poorest 40 percent earned about 10 percent of
Suppose that a group of physicians establishes a joint practice in a remote area. This group pro- vides the only health care available to people in the local community, and its objective is to
A government agency notifies the physicians' group in Problem 29-10 that to continue providing services in the community, the group must document its activities. The resulting paperwork expenses
Now suppose that in the situation described in Problem 29-13, the distribution of income changes in such a way that A increases to one-third of the area denoted B. What is the new value of the Gini
Based on your answers to Problems 29-13 and 29-14, when A increased, did the degree of income inequality increase or decrease? Explain why your answer makes sense by referring to the implied change
Consider the diagram in Problem 30-4, and answer the following questions.a. Suppose that a new technology for reducing water pollution generates a reduction in the marginal cost of pollution
Suppose that a new chief of the government agency discussed in Problem 30-7 decides to reduce the supply of pollution allowances. Evaluate the effects this policy change will have on the market price
Based on your answers to Problem 31-1, which nation has a comparative advantage in producing pastries? Which nation has a comparative advan- tage in producing sandwiches?Problem 31-1To answer the
Suppose that the two nations in Problems 31-1 and 31-2 choose to specialize in producing the goods for which they have a comparative advan- tage. They agree to trade at a rate of exchange of 1 pastry
Based on your answers to Problem 31-4, which nation has a comparative advantage in producing 8K TVs? Which nation has a comparative advantage in producing bottles of wine?Problem 31-4Residents of the
Suppose that the two nations in Problem 31-4 decide to specialize in producing the good for which they have a comparative advantage and to engage in trade. Would residents of both nations find a rate
Refer to your answers to Problem 31-7 when answering the following questions.a. Which one of the following rates of exchange of portable power banks for flash memory drives will be acceptable to both
Based on your answer to Problem 31-16, what are the total tariff revenues of the U.S. government? What percentage do U.S. consumers ultimately pay because of a higher price generated by the
Suppose that signs of an improvement in the Japanese economy lead international investors to resume lending to the Japanese government and busi- nesses. How would this event affect the market for the
Review Figure A-4, plot the points on coordinate axes, and then state whether each of the following paired observations is on, above, or below the x axis and on, to the left of, or to the right of
Calculate the slope of the function you graphed in Problem A-5.Problem A-5Given the function y = Sx, complete the following schedule and plot the curve. y X -4 -2 0 2 4
Calculate the slope of the function you graphed in Problem A-6.Problem A-6Given the function y = 8 - 2x, complete the following schedule and plot the curve. y X -4 -2 ON
After the concert discussed in Problem 2-3 is over and you and your friend are traveling home, you discuss how each of you might otherwise have used the four hours devoted to attending the
Consider a change in the table in Problem 2-6.The student's set of opportunities is now as follows:Does the PPC illustrate the law of increasing additional cost? What is the opportunity cost to this
In response to Senator Creighton's statement reported in Problem 2-10, Senator Long replies,"We must remain at our current production combination if we want to be able to produce more consumption
Senator Borman interjects the following comment after the statements by Senators Creighton and Long reported in Problems 2-10 and 2-11: " In fact, both of my esteemed colleagues are wrong, because an
A nation's residents can allocate their scarce resources either to producing consumption goods or to producing human capital-that is, providing themselves with training and education. The table below

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