Winter 2007 Economics 20A Answers to Midterm Examination 1. Suppose that in the year 2010 the number of births is temporarily high. Hoes does this baby boom affect the price of baby-sitting services in 2015 and in 2025? [Hint: 5-year olds need babysitters, whereas 15-year olds can be baby sitters]. ANSWER: The question comes from the textbook, p. 86. A temporarily high birth rate in the year 2010 leads to opposite effects on the price of baby-sitting services in the years 2015 and 2025. In the year 2015, there are more five-year olds who need sitters, so the demand for baby-sitting services rises. The result is a higher price for baby-sitting services in 2015. However, in the year 2025, the increased number of 15-year-olds shifts the supply of baby-sitting services to the. The result is a decline in the price of baby-sitting services. 2. Lovers of classical music persuade Congress to impose a price ceiling of $40 per concert ticket. As a result of this policy, do more or fewer people attend classical music concerts? ANSWER: The question comes from the textbook, p. 132. If the price ceiling of $40 per ticket is below the
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