Chapter 2 | Choice in a World of Scarcity 43
9. Explain why individuals make choices that are directly on the budget constraint, rather than inside the budget
constraint or outside it.
People generally work out how much they have to spend
Chapter 3 Problem Questions
52. Review Figure 3.4 again. Suppose the price of gasoline is $1.00. Will the quantity demanded be lower or higher than
at the equilibrium price of $1.40 per gallon? Lower. Will the quantity supplied be lower or h
12. What determines the level of prices in a market?
13. What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
If a product is at a higher price people dont want to purchase the item. They will
CRITICAL THINKING QUESTIONS
22. No, the United States isnt regressing. The other countries are catching up when their prior
real GDP was significantly lower than the U.S. If the countries continue to grow, then yes, they
can overtake the U.S