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Unformatted text preview: 2. If the price of tobacco is supported by limiting land used to grow it, then the supply curve for tobacco shifts to the left. The anti-smoking publicity works to shift the demand curve to the left. Both of these policies work together to reduce consumption of tobacco. 3. Since the new budget constraint goes through the initial point of consumption, point it cannot have the same slope as indifference curve original indifference curve at this point since the indifference curve cannot be tangent to two budget constraints with different slopes. A higher indifference curve is possible (the TAs can further explain this in lab). 4. (a) Disagree. The top half of the demand curve is elastic. (b) Disagree. Price would fall but firms would earn more revenue because demand is elastic over the range of prices shown....
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This homework help was uploaded on 04/08/2008 for the course ECON W1155 taught by Professor Gulati during the Spring '08 term at Columbia.
- Spring '08