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extra problems - (c An increase in the price of chicken...

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(1) Use graphical analysis to answer: How will a decline in airfare affect intercity bus fares and the price of hotel rooms in resort communities? (2) Many people think of their air travel as being free when they use frequent-flyer coupons. Explain why these people are likely to make wasteful travel decision. (3) Problem 3.8 (page 72) For each of the following statements, draw a diagram that illustrates the likely effect on the market for eggs. Indicate in each case the impact on equilibrium price and equilibrium quantity. (a) A surgeon general warns that high cholesterol foods cause heart attacks (b) The price of bacon, a complementary product, decreases
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Unformatted text preview: (c) An increase in the price of chicken feed occurs. (d) Caesar salads become trendy at dinner parties. (The dressing is made with raw eggs.) (e) A technological innovation reduces egg breakage during packing. (4) Problem 4.10 (page 87) Use the following diagram to calculate total consumer surplus at a price of $8 and production of 6 million meals per day. For the same equilibrium, calculate total producer surplus. Assuming prices remained at $8 but production was cut to 3 million meals per day, calculate producer surplus and consumer surplus. Calculate the deadweight loss from underproduction. 3 Q S 14 5 11 D 8 6 2 p...
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