Questions from General Economics

Q: “An increase in the demand for notebooks raises the quantity of

“An increase in the demand for notebooks raises the quantity of notebooks demanded but not the quantity supplied.” Is this statement true or false? Explain.

Q: A subsidy is the opposite of a tax. With a $

A subsidy is the opposite of a tax. With a $0.50 tax on the buyers of ice-cream cones, the government collects $0.50 for each cone purchased; with a $0.50 subsidy for the buyers of ice-cream cones, th...

Q: Which causes a shortage of a good—a price ceiling or

Which causes a shortage of a good—a price ceiling or a price floor? Justify your answer with a graph.

Q: What mechanisms allocate resources when the price of a good is not

What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?

Q: Define price ceiling and price floor and give an example of each

Define price ceiling and price floor and give an example of each. Which leads to a shortage? Which leads to a surplus? Why?

Q: In a supply-and-demand diagram, show how a

In a supply-and-demand diagram, show how a tax on car buyers of $1,000 per car affects the quantity of cars sold and the price of cars. In another diagram, show how a tax on car sellers of $1,000 per...

Q: Explain each of the following statements using supply-and-demand

Explain each of the following statements using supply-and-demand diagrams. a. “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.” b. “When the weat...

Q: Ketchup is a complement (as well as a condiment) for

Ketchup is a complement (as well as a condiment) for hot dogs. If the price of hot dogs rises, what happens to the market for ketchup? For tomatoes? For tomato juice? For orange juice?

Q: The market for pizza has the following demand and supply schedules:

The market for pizza has the following demand and supply schedules: a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market? b. If the actual price in this m...

Q: Consider the following events: Scientists reveal that eating oranges decreases the

Consider the following events: Scientists reveal that eating oranges decreases the risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees produce more oranges. Il...