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1 C H A PT ER 3 3 - 1 De s c ' be t he ma j or so u r c e s of inc o m e

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c Highe r a v e ra ge pa y le v e ls fo r w o m e n d Lo w e r de m a n d fo r la bo r in in du s t r ie s t ha t t r a dit io n a lly e m ploy

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e n n e in t he Un ite d Sta te s ? Whic h type s o f t a x e s a r e m o s t im po rta n t

a t e a c h le v e l o f go v e r n m e n t? Whic h tw o t a x e s pr o v ide t he m o s t

r e v e n u e to t he fe de r a l go v e r n m e n t?

12 . (EXt er na 加固 Su ppo s e t he r e is a n e x te r n a l c o s t , o r n e ga t iv e ex t

n a lity, a s s o c ia te d w i t h pr o du c t io n of a c e r ta in go o d . Whae s w r o n g

w it h le t tin g t he m a r ket de te r m in e ho w m u c h o f t his go o d w ill be

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4 3 E x p l a i n w h y a s u p p l y c u r v e u s u a l l y s l o p e s u p w a r d

82o 0 (Su pp 1p) Why is a fir m w illin g a n d a ble to in t r ea s e the qu a n tity s

S" 50 p lie d a s the pr o du c t pr ic e In c r e a s e s?

14 0 5 {Su pp/y) Wha t ls the law ol Suppl Giv e a n e x a m ple o f how yo u

pc l c e n ta g, t o l l 11c o : l l e i ; p l d :n ' Y 1 l e a c h :( v el?

ha v e o bs e rv e d the \a w o f s u pply a t w o rk What :s the r e la tio n s hip

> t l o i a x r a to pr o gr e s s iv c prf JpGri Fp \ o r c gr e s s iv ü?

be tw e e n t he la w o f s u PPIy a n d t he s u pply c u w e?

\ ? x is the n l a r gin a t _ r a c u l 1 e f;í s : 3 1 ooo o l in c o m e? 4 I d e n t i f y Dv e t h i n g s w h i c h c o u l d s h i f t

l l s e c o n d $ 1 00 3? The thi: d 31 0r v? a s u p p l y c u r v e t o t h e r i g h t o r l e f t

1 i n E m m i?n t Re v on t i eì w ha t a . e u l g £o Lrrc e s o f go v e r n m e n t r ev 6 (S.j pp!y Shiñer s) Lis t t he fiv e thin gs tha t a r e he ld co n sta n t a lo n g a ¿ n u e l f 1 \he Un ite d S!a te s? Wï \ic h þ pe s o f ta x e s a r e m o ,i t im po

rta n t m a rke t s u ppIy c u rv e a n d ide n ti' f the c ha nge In ea c h tha t w o u ld s hift

a t p a c h le v e l o f go ' / e m m e n t? Whic h tw u tax e s r ro v ide the m o s t

tha t s u pply c u rv e to the right that is tha t w o u ld inc rease s u pply

n : v e n u e to the :e de r a l go v e r n m e n t? , {Dem a n d a n d s u opl p) Ho w do yo u th in k e a c h o f the fo llo w in g

12 (EXt ðmal Hi esì Su ppo s e th e r e is a n e x te r n a l c o s t o r n e ga tiv e ex te r

fe c t e d the w o r ld pr ic e o f o il? (Us e de m a n d a nd s u pply a n a lys is ) n a lity l s s o c ia te d w ith pro d u c tio n o f a c e r ta in go o d What s w r o n g a Tax c r e dits w e r e off e re d fo r e x pe n ditu re s o n ho m e in s u latio n w ith le t t in g the m a r ke t de t e r m in e ho w m u c h o f this goo d w

ill be b The Ala s ka n o il pipe lin e w a s c o m ple t e d

pr o du c e d ? c The c e ilin g o n the pr ic e o f o il w a s r e m o v e d

3 4 E x p l a i n w h y c o u n t r i e s t r a d e w i t h e a c h d o il w a s d is c o v e r e d in the No r th Sea

o t h e r a n d w h y t h e y s o m e t i m e s a c t t o r e s t r i c t e Spo rt u t ility v e hic le s a n d m in iv a n s be c a m e po pu la r

t h a t t r a d e f The u s e o f n u c le a r po w e r de c lin e d

13 Qn te r n a tio n a l Tr a de ) Why do e s in t e r n a t io n a l t r a de o c c u r ? w ha t do e s 8 (De m a n d a n d Sil pp/y) Wha t ha ppe n s to the e qu ilibriu m pr ic e a n d

it m e a n to r u n a de f ic it in the m e r c ha n dis e t r a de ba la n c e ? q u a n tity o f ic e c re a m in r e s po n s e to e a c

h o f the fo llow in g? Ex pla in

14 (In [e r n a tìo n a / Tr a de) Dis tin gu is h be lw e e n a t a r iff a n d a qu o ta w ho

a The pr ic e o f da iry c o w fo dde r in c r e a s e s b e n e fits f r o m a n d w ho is ha r m e d by SUCH r e s t r ic t io n s o n 〒 m po r ts

? b The pr ic e o f be ef de c r e a s e s

C H A P T E R 4 c o u s ly the pric e o ï s u ga r (u s ed t o pr o du t e ic e c r ea m ) in c r e a s e s

4 1 E x p l a i n w h y a d e m a n d c u r v e s l o p e s

4 5 E x p l a i n w h y s u r p l u s e s p u s h p D c e s

d o w n w a r d d o w n w h i l e s h o r t a g e s d r i v e p D c e s u p

1 (shi nin g De m a n o ) u s in g de m a n d a n d s u pp ly c u rv e s s how the

g ¢Ma r k e t s u rp lu s ) w hy w o u ld 1ì rm s a t c e pt a low e r pr ic e if the r e is a

e ff e c t o f e a c h o f the fo llo w in g o n t he m a r ket fo r c iga r ett e s :

m a r ket s u r plu s ? a A c u r e fo r lu n g c a n c e r is f o u n d

1o (Ma l t e t s ho r 1ag e] w hy w o u ld fir m s r a is e the pr ic e i f ther e is a

b The pr ic e o ï c iga r s in c r e a s e s m a r ke t s ho rt a ge a n d w hy w o u ld s o m e c o n s u m e rs p

a y tha t h0ghe r

c w a ge s in c r e a s e s u bs t a nt ia lly in s ta t es tha t gr ow to ba c c o

pr ic e At w ha t poin t w o u ld fir m s s to p r a is in g the pr ic e?

d A fe rtiliz e r t hat in c r e a s e s the yie ld pe r a c r e o f to ba c c o ls

dis c o v e r e d 4 6 p r e d i c t t h e i m p a c t o f a c h a n g e i n d e m a n d

e The r e ls a s ha r p in c r e a s e in the pr ic e o f m a tc he s lighte r s a n d o r s u p p l y o n t h e e q u i l i

b r i u m p r i c e a n d

light e r flu id q u a n t i t y

f Mo r e s ta te s pa s s la w s r e s t r ic tin g s m o kin g in r es ta u ra n ts a n d

11 qui l i bri um ) If a pr ic e is n o t a n e qu ilibr iu m pr ic e the r e is a t

the pr ic e is to o high o r to o lo w to be gin w ith m e a oj u s

m i e n l de n c y fo r It t o m o v e t o its e qu

ilibr iu m lev e l Re ga rdle s s of w hethe r

go o ds de te r m in e w he the r the go o ds a r e s u bs tit u t es c o

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