Economics Homework 2

Economics Homework 2 - Economics Homework # 2 1. Assume...

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Economics Homework # 2 1. Assume that tea and lemons are complements and that coffee and tea are substitutes. a. How if at all, will the imposition of an effective ceiling price on tea affect the price of lemons. Explain. b. How, if at all, will the imposition of an effective ceiling price on tea affect the price of coffee? Explain. 2. Hardware and software for computers are complements. Discuss the effects on the equilibrium price and quantity a. In the software market, when the price of computer hardware falls. b. In the hardware market, when the price of computer software rises. 3. The government, fearful that a titanium shortage could jeopardize national security, imposes a tax of $2/oz on the retail price of this rare metal. It collects the tax from titanium sellers. The original supply and demand schedules for titanium are as shown in the diagram. Show, in the same diagram, how the short run equilibrium price and quantity of titanium will be affected by the tax. Label all important points clearly. 4.
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This note was uploaded on 02/06/2011 for the course BUAD 200x taught by Professor Hergenrather during the Spring '05 term at USC.

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Economics Homework 2 - Economics Homework # 2 1. Assume...

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