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Chapter 3
1.(Evolution of the Household) Determine each of the following would increase or decrease the opportunity cost for mothers who choose not to work outside the home. Explain your answer.
A. Higher levels of education for women
B. Higher unemployment rates for women
C. Higher average pay levels for women
D. Lower demands for labor in industries that traditionally employ larger numbers
10. (Taxes Rates) Suppose taxes are related to income as follows:
Income: $1,000 Taxes: $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 $1000 of income? The second $ 1,000? The third $1,000?
2. ( 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 automobilies
E. Golf clubs and golf balls
3. (Demands Shifters) List five things that are held constant along a market demands curve, and identify the change in each that would shift that demand curve to the right- that is, that would increase demands.
4. (Supply) Why is a firm willing and able to increase the quantity supplied as the product price increase?
12. (Equilibrium) If a price is not equilibrium price, there is a tendency for it to move to its equilibrium level. Regardless of whether the price is too high or too low begin with, the adjustment process will increase the quantity of the good purchase. Explain using a demand and supply diagram.
A. Complete the below
B. What market pressure occurs when quantity demandeds exceeds quantity supplied? Explain.
C. What market pressure occurs when quantity supplied exceeds quantity supplied? Explains
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 Quantity demand bushel
$1.80 320
2.00 300
2.20 270
2.40 230
2.60 200
2.80 180
Quantity Supplied (millions of bushel)
200
230
270
300
330
350
Surplus Shortage Will price Rise or Fall