Econ 302 Homework 3

Econ 302 Homework 3 - Ali Toossi 3 Problem Set rd Chapter...

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3 rd Problem Set Chapter 2: Questions for review 5. a) Change in demand b) Change in demand c) Change in quantity demanded d) Change in demand 8. For the tax burden to fall mostly on consumers rather than producers (buyers rather than sellers), you want to find a product (or products) for which the quantity supplied is very responsive to price but quantity demanded is less responsive to price. Addictive goods like cigarettes and alcohol may fit this description. Chapter 2: Problems p.44 1. a) An effective price ceiling on tea will cause a shortage in tea. However, this will have no affect on lemons because even though there is a decrease in price on tea, it is not an equilibrium shift. A shortage in tea will not have an effect on the price of lemons. b) The imposition of a price ceiling on tea will cause a shortage in tea, thus causing more people to buy coffee because it is a substitute. This will cause the price to increase. 5.
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Econ 302 Homework 3 - Ali Toossi 3 Problem Set rd Chapter...

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