PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 10, Problem 1P
(a)
To determine
Explain how cigarettes fulfilled the three functions of money in the prisoners’ camp.
(b)
To determine
Explain why the prisoners chose cigarettes to make transactions.
(c)
To determine
Determine whether a non-smoking prisoner would have been willing to accept cigarettes for transactions.
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You own a hot dog stand that you set up outside the student union every day at
lunch time. Currently, you are selling hot dogs for a price of $3, and you sell 30 hot
dogs a day (point A on the diagram). You are considering cutting the price to $2.
The graph shows two possible increases in the quantity sold as a result of your
price cut. Use the information in the graph (new quantities are given on the
horizontal axis) to calculate the price elasticity between these two prices on each
of the demand curves. Use the midpoint formula to calculate the price elasticities.
A
On the demand curve containing the points "A" and "B", the price elasticity of
demand for a price cut from $3 to $2 is|. (Hint: Include the negative sign and
enter your response rounded to two decimal places.)
D2
On the demand curve containing the points "A" and "C", the price elasticity of
demand for a price cut from $3 to $2 is. (Hint: Include the negative sign and
enter your response rounded to two decimal places.)
:37…
Situation 4-1
During the winter of 1973-74, a general system of wage
and price controls (including a price ceiling on gasoline)
was in force in the United States. At the beginning of 1974,
some oil-producing countries imposed an oil embargo (a
legal prohibition on commerce) on the West. In the spring
of 1974, price controls were abolished.
Because price controls were in effect at the time the embargo occurred, an economist would
predict that
the number of dollars one would need to pay at the pump for a full tank of
gasoline would increase sharply.
the number of dollars one would need to pay at the pump for a full tank of
gasoline would decline sharply.
O long waiting lines and black markets would appear.
a surplus of gasoline would result.
You are a University student who must live off-campus in the second year. There are two types of one-bedroom apartment where you prefer to live because it is near the campus. One rents for $400 per month and the other $360. According to the University Students’ Housing Bureau 80 percent of apartments in the area consists of the $400 type while the remaining 20 percent are of the $360 type. You need to visit the apartments to discover the rent. Suppose the first apartment you visit cost $400 and the opportunity cost of your visit is $6 per visit.
1. If you are risk neutral person should you visit another apartment or rent the one you have found.2. Suppose you visit another apartment and find out that it rents for $400, should you visit another apartment?
Chapter 10 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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