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Chapter 4: Q. 4.17 (page 94)
Consider Figure 4-3.Suppose that the government
reduces the ceiling price to\(500 per unit.Would
the shortage at the\)500-per-unit ceiling price be
greater than at the$600-per-unit price ceiling?
Yes.
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There are simultaneous changes in the demand for and supply of global-positioning system (GPS) devices, with the consequences being an unambiguous increase in the market clearing price of these devices but no change in the equilibrium quantity. What changes in the demand for and supply of GPS devices could have generated these outcomes? Explain.
Why do you suppose that the Venezuelan government has begun to provide individuals with coupons giving them the right to purchase only strictly limited quantities of flour, milk, and toilet paper?
The consequences of decriminalizing illegal drugs
have long been debated.Some claim that legal
ization will lower the price of these drugs and
reduce related crime and that more people will
use these drugs.Suppose some of these drugs are
legalized so that anyone may sell them and use
them.Now consider the two claims-that price
will fall and quantity demanded will increase.
Based on positive economic analysis,are these
claims sound?
Consider the diagram below,which depicts the labor
market inacity that has adopteda"living wage law"
requiring employers to payaminimum wage rate of
\(11 per hour.Answer the questions that follow.
a.What condition exists in this city's labor market
at the present minimum wage of\)11 per hour?
How many people are unemployed at this wage?
b.Acity councilwoman has proposed amending
the living wage law.She suggests reducing the
minimum wage to\(9per hour.Assuming that
the labor demand and supply curves were to
remain in their present positions,how many
people would be unemployed atanew\)9
minimum wage?
c.Acouncilman has offeredacounterproposal.In
his view,the current minimum wage is too low
and should be increased to\(12 per hour.
Assuming that the labor demand and supply
curves remain in their present positions,how
many people would be unemployed atanew\)12
minimum wage?
Suppose that in Figure 4-4,the government
reduces the floor price of milk below the displayed
\(0.10-per-pound floor price,to\)0.08 per pound.
Will the excess quantity of milk supplied increase
or decrease asaconsequence?
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