Questions from General Economics

Q: On a supply-and-demand diagram, show equilibrium price

On a supply-and-demand diagram, show equilibrium price, equilibrium quantity, and the total revenue received by producers.

Q: A storm destroys half the fava bean crop. Is this event

A storm destroys half the fava bean crop. Is this event more likely to hurt fava bean farmers if the demand for fava beans is very elastic or very inelastic? Explain.

Q: List and explain the four determinants of the price elasticity of demand

List and explain the four determinants of the price elasticity of demand discussed in the chapter.

Q: Define the price elasticity of supply. Explain why the price

Define the price elasticity of supply. Explain why the price elasticity of supply might be different in the long run than in the short run.

Q: How might a drought that destroys half of all farm crops be

How might a drought that destroys half of all farm crops be good for farmers? If such a drought is good for farmers, why don’t farmers destroy their own crops in the absence of a drought?

Q: Suppose the federal government requires beer drinkers to pay a $2

Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.) a. Draw a supply...

Q: Define the price elasticity of demand. Explain the relationship between

Define the price elasticity of demand. Explain the relationship between total revenue and the price elasticity of demand.

Q: Over the past 30 years, technological advances have reduced the cost

Over the past 30 years, technological advances have reduced the cost of computer chips. How do you think this has affected the market for computers? For computer software? For typewriters?

Q: A senator wants to raise tax revenue and make workers better off

A senator wants to raise tax revenue and make workers better off. A staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid by wo...

Q: If the government places a $500 tax on luxury cars,

If the government places a $500 tax on luxury cars, will the price paid by consumers rise by more than $500, less than $500, or exactly $500? Explain.