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Chapter 4 Solutions (odd)

# Chapter 4 Solutions (odd) - Chapter 4(solution to odd...

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Chapter 4 (solution to odd questions)

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3) The diagram shows that some people are willing to pay a very high price (even higher than P *) for the tickets. Some nonprice rationing system was used to allocate the tickets to people willing to pay as little as Px . What a scalper does is pay those near Px more than they paid for the tickets and then sells the tickets to someone nearer or even above P *. Since both the buyers and sellers engage in the trade voluntarily, both are better off and the exchange is efficient. 5. Disagree; this is not hard to explain. The law of demand does say that higher prices should lead to lower demand, but that refers to a change in the quantity demanded, a movement along a demand curve. An increase in demand (a rightward shift of the demand curve) would result in a higher price. Therefore, a sharp increase in the demand for apartments in New York City is entirely consistent with a sharp increase in rent, which is the price of those apartments.

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7) 9) (a) Using demand and supply data for the United States only, the equilibrium price is \$76 and the equilibrium quantity is 12 million barrels. (b) With a price ceiling of \$74, quantity demanded equals 13 million barrels, while quantity supplied equals 10 million barrels. There is an excess demand of 3 million barrels.
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Chapter 4 Solutions (odd) - Chapter 4(solution to odd...

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