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Chapter: 6 -Problem: 7 >> How does a tax on a good affect the price paid by buyers, the price received by sellers, and the quantity sold?
Answer Preview: A tax on a good raise…

, Chapter: 12 -Problem: 8 >> How and why does a firm’s average-total-cost curve differ in the short run compared with the long run?
Answer Preview: In the long run, a firm can adjust the factors of production that are f…

, Chapter: 17 -Problem: 4 >> In what way is a college degree a form of capital?
Answer Preview: A college degree is a for…

, Chapter: 23 -Problem: 6 >> List and explain the three theories for why the shortrun aggregate-supply curve slopes upward.
Answer Preview: Three theories explain why the short-run aggregate-supply curve slopes upward: (1) …

, Chapter: 21 -Problem: 13 >> Explain whether each of the following events increases or decreases the money supply. a. The Fed buys bonds in open-market operations. b. The Fed reduces the reserve requirement. c. The Fed increases the interest rate it pays on reserves. d. Citibank repays a loan it had previously taken from the Fed. e. After a rash of pickpocketing, people decide to hold less currency. f. Fearful of bank runs, b
Answer Preview: a. When the Fed buys bonds in open market operations, the money su…

, Chapter: 4 -Problem: 7 >> Does a change in producers’ technology lead to a movement along the supply curve or to a shift in the supply curve? Does a change in price lead to a movement along the supply curve or to a shift in the supply curve?
Answer Preview: A change in producers' tec…

, Chapter: 17 -Problem: 8 >> How does the rate of population growth influence the level of GDP per person?
Answer Preview: The higher the rate of popula…

, Chapter: 12 -Problem: 2 >> What is the relationship between a firm’s total revenue, profit, and total cost?
Answer Preview: The relationship between …

, Chapter: 15 -Problem: 2 >> Explain why an economy’s income must equal its expenditure.
Answer Preview: An economy's income must equal …

, Chapter: 23 -Problem: 4 >> List and explain the three reasons the aggregate demand curve slopes downward.
Answer Preview: The aggregate-demand curve slopes downward because: (1) a …

, Chapter: 13 -Problem: 2 >> What are the main characteristics of a competitive market?
Answer Preview: The main characteristics of a competitive fir…

, Chapter: 13 -Problem: 6 >> Under what conditions will a firm exit a market? Explain.
Answer Preview: A firm will exit a market if the …

, Chapter: 15 -Problem: 4 >> A farmer sells wheat to a baker for $2. The baker uses the wheat to make bread, which is sold for $3. What is the total contribution of these transactions to GDP?
Answer Preview: The contribution to …

, Chapter: 2 -Problem: 6 >> Name one economic interaction that isn’t covered by the simplified circular-flow diagram.
Answer Preview: Interaction…

, Chapter: 15 -Problem: 3 >> Which contributes more to GDP—the production of an economy car or the production of a luxury car? Why?
Answer Preview: The production of a luxury c…

, Chapter: 16 -Problem: 5 >> Over a long period of time, the price of a candy bar rose from $0.20 to $1.20. Over the same period, the CPI rose from 150 to 300. Adjusted for overall inflation, how much did the price of the candy bar change?
Answer Preview: Because the overall price level …

, Chapter: 21 -Problem: 2 >> What distinguishes money from other assets in the economy?
Answer Preview: Money is different from othe…

, Chapter: 5 -Problem: 1 >> 1. A life-saving medicine without any close substitutes will tend to have a. a small elasticity of demand. b. a large elasticity of demand. c. a small elasticity of supply. d. a large elasticity of supply. 2. The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is a. 1/5. b. 1/2. c. 2. d.
Answer Preview: 1. a …

, Chapter: 22 -Problem: 2 >> Explain how an increase in the price level affects the real value of money.
Answer Preview: An increase in the price leve…

, Chapter: 4 -Problem: 5 >> Harry’s income declines, and as a result, he buys more pumpkin juice. Is pumpkin juice an inferior or a normal good? What happens to Harry’s demand curve for pumpkin juice?
Answer Preview: Because Harry buys more pumpkin juice whe…

, Chapter: 22 -Problem: 6 >> According to the Fisher effect, how does an increase in the inflation rate affect the real interest rate and the nominal interest rate?
Answer Preview: According to the Fisher effect, an inc…

, Chapter: 7 -Problem: 4 >> In a supply-and-demand diagram, show producer and consumer surplus at the market equilibrium.
Answer Preview: Figure 4 Figure 4 shows producer and …

, Chapter: 16 -Problem: 7 >> Suppose that the year you were born someone bought $100 of goods and services for your baby shower. How much would you guess it would cost today to buy a similar amount of goods and services? Now find data on the CPI and compute the answer based on it.
Answer Preview: They should multipl…

, Chapter: 19 -Problem: 6 >> What factors should a stock analyst think about in determining the value of a share of stock?
Answer Preview: A stock analyst will …

, Chapter: 2 -Problem: 7 >> Draw and explain a production possibilities frontier for an economy that produces milk and cookies. What happens to this frontier if a disease kills half of the economy’s cows?
Answer Preview: Figure 3 shows a production possibilities frontier between milk and cookies ( PPF 1 ). If a disea…

, Chapter: 15 -Problem: 5 >> Many years ago, Peggy paid $500 to put together a record collection. Today, she sold her albums at a garage sale for $100. How does this sale affect current GDP?
Answer Preview: The sale of used r…

, Chapter: 18 -Problem: 5 >> What is investment? How is it related to national saving in a closed economy?
Answer Preview: Investment refers to the p…

, Chapter: 15 -Problem: 11 >> Fill in the blanks: Transcribed Image Text: Real GDP (in 2000 dollars) Nominal GDP GDP Deflator (base year 2000) (in current dollars) Year 1970 1,200 3,000 5,000 1980 60 1990 6,000 100 2000 8,000 2010 15,000 200 10,000 2020 300 2030 20,000 50,000
Answer Preview: See completed table below with answers in bold. Year 1970 …

, Chapter: 15 -Problem: 19 >> Goods and services that are not sold in markets, such as food produced and consumed at home, are generally not included in GDP. Can you think of how this might cause the numbers in the second column of Table 3 to be misleading in a comparison of the economic well-being of the United States and India? Explain.
Answer Preview: In countries like India, people produce and con…

, Chapter: 1 -Problem: 22 >> During the Revolutionary War, the American colonies could not raise enough tax revenue to fully fund the war effort. To make up the difference, the colonies decided to print more money. Printing money to cover expenditures is sometimes referred to as an “inflation tax.” Who do you think is being “taxed” when more money is printed? Why?
Answer Preview: When governments print m…

, Chapter: 15 -Problem: 12 >> The government purchases component of GDP does not include spending on transfer payments such as Social Security. Thinking about the definition of GDP, explain why transfer payments are excluded.
Answer Preview: With transfer pa…

, Chapter: 2 -Problem: 2 >> In what ways is economics a science?
Answer Preview: Economics is a science because economists use the scientific method. They dev…

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