Part -1
1- Describe the major sources of income and expenditures for households
(Evolution of the Household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answers.
a Higher levels of education for women
b. Higher unemployment rates for women
c. Higher average pay levels for women
d. Lower demand for labor in industries that traditionally employ large numbers of women
2- (Tax Rates) Suppose taxes are related to income as follows:
Income Taxes
$1,000 $200
$2,000 $350
$3,000 $450
a. What percentage of income is paid in taxes at each level?
b. Is the tax rate progressive. proportional, or regressive?
c. What is the marginal tax rate on the first $1,000 of income? The second $1,000? The third $1,000?
Part -2
Explain why a demand curve slopes downward
1- (Substitutes and Complements) For each of the following pair of goods, determine whether the goods are substitutes, complements, or unrelated:
a. Peanut butter and jelly
b. Private and public transportation
c. Coke and Pepsi
d. Alarm clocks and automobiles
e. Golf clubs and golf balls
Identify five things which could shift a demand curve to the right or left
2. (Demand Shifters) List five things that are held constant along a market demand curve, and identify the change in each that would shift that demand curve to the right-that is, that would increase demand.
Explain why a supply curve usually slopes upward
3. (Supply)Why is a firm willing and able to increase the quantity sup¬plied as the product price increases?
4. (Equilibrium) Assume the market for corn is depicted as in the table that appears below.
a. Complete the table below.
b. What market pressure occurs when quantity demanded exceeds quantity supplied? Explain.
c. What market pressure occurs when quantity supplied exceeds quantity demanded? Explain.
d. What is the equilibrium price?
e. What could change the equilibrium price?
f. At each price In the first column of the table below, how much is sold?
|
Price per Bushel
|
Ouantity
Demanded
(millions
of bushels)
|
Quantity Supplied (millions of bushels)
|
surplus/shortage |
will price rise or fall? |
|
S1.80
|
320
|
200
|
|
|
|
2.00
|
300
|
230
|
|
|
|
2.20
|
270
|
270
|
|
|
|
2.40
|
230
|
300
|
|
|
|
2.60
|
200
|
330
|
|
|
|
2.80
|
180
|
350
|
|
|