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management information systems

Questions and Answers of Management Information Systems

Do Pierre, a software engineer earning $200,000 a year, and Sally, a single mother whose welfare benefits are about to expire, get equal weight in the measure of consumer surplus? (Institutionalist)
The chapter frames the issue of the effects of taxation in terms of its effects on producer and consumer surplus.a. What does that framework leave out of the analysis?b. How might one frame the
The quotation from Calvin Coolidge at the beginning of the chapter equates taxation to robbery.a. Is that a reasonable position to take?b. What alternatives to taxation could a country consider to
Given the graph below, up to how much would suppliers be willing to spend to restrict supply to Q1? (LO7-4) Price Demand Q1 Quantity Supply
What is the general rule of political economy? Give an example from the real world. (LO7-4)
Define rent seeking. Do firms have a greater incentive to engage in rent-seeking behavior when demand is elastic or when it is inelastic? (LO7-4)
A political leader comes to you and wonders from whom she will get the most complaints if she institutes a price ceiling when demand is inelastic and supply is elastic. (LO7-3)a. How do you
Use the graph below to answer the following questions:(LO7-3)a. What are equilibrium price and quantity?b. What is producer surplus when the market is in equilibrium?c. What is consumer surplus when
Suppose government imposed a minimum wage above equilibrium wage. (LO7-3)a. Assuming nothing else changes, what do you expect to happen to the resulting shortage of jobs as time progresses?b. What do
Demonstrate how a price floor is like a tax on consumers and a subsidy to suppliers. Label the following: tax on consumers, transfer of surplus to suppliers, and welfare loss. (LO7-3)a. Who gets the
In which case would the shortage resulting from a price ceiling be greater: when supply is inelastic or elastic?Explain your answer. (LO7-3)
Calculate the percentage of the tax borne by the demander and supplier in each of the following cases: (LO7-2)a. ED = 0.3, ES = 1.2b. ED = 3, ES = 2c. ED = 0.5, ES = 1d. ED = 0.5, ES = 0.5e.
Should tenants who rent apartments worry that increases in property taxes will increase their rent? Does your answer change when considering the long run? (LO7-2)
Which good would an economist normally recommend taxing if government wanted to minimize welfare loss and maximize revenue: a good with an elastic or inelastic supply? Why? (LO7-2)
What percentage of a tax will the demander pay if price elasticity of supply is 0.3 and price elasticity of demand is 0.7? What percentage will the supplier pay? (LO7-2)
If the demand for a good is perfectly elastic and the supply is elastic, who will bear the larger share of the burden of a tax on the good where the tax is paid by consumers? (LO7-2)
Suppose demand for cigarettes is inelastic and the supply of cigarettes is elastic. Who would bear the larger share of the burden of a tax placed on cigarettes? (LO7-2)
What types of goods would you recommend that the government tax if it wants the tax to result in no welfare loss? Name a few examples. (LO7-2)
If the federal government wanted to tax a good and suppliers were strong lobbyists, but consumers were not, would government prefer supply or demand to be more inelastic?Why? (LO7-2)
Use the graph below that shows the effect of a$4 per-unit tax on suppliers to answer the following questions:(LO7-2)a. What are equilibrium price and quantity before the tax? After the tax?b. What is
Demonstrate the welfare loss of: (LO7-2)a. A restriction on output when supply is perfectly elastic.b. A tax t placed on suppliers.c. A subsidy s given to suppliers.d. A restriction on output when
Given this elasticity, what would be the impact of funding the Social Security program with tax increases on the number of hours worked and on the amount of taxes collected to fund Social
Minneapolis Federal Reserve Bank economist Edward Prescott estimates the elasticity of the U.S. labor supply to be
How is elasticity related to the revenue from a sales tax? (LO7-2)
Why does nearly every purchase you make provide you with consumer surplus? (LO7-1)
Why isn’t the combination of consumer and producer surplus maximized if there is either excess demand or supply? (LO7-1)
If there were only two goods in the world, can you say whether they would be complements or substitutes?Explain your answer.
Colleges have increasingly used price sensitivity to formulate financial aid. The more eager the student, the less aid he or she can expect to get. Use elasticity to explain this phenomenon. Is this
In the discussion of elasticity and raising and lowering prices, the text states that if you have an elastic demand, you should hesitate to raise your price, and that lowering price can possibly
In 2004, Congress allocated over $20 billion to fight illegal drugs. About 60 percent of the funds was directed at reducing the supply of drugs through domestic law enforcement and interdiction. Some
Demand for “prestige” college education is generally considered to be highly inelastic. What does this suggest about tuition increases at prestige schools in the future?Why don’t colleges raise
Economists have estimated the demand elasticity for motor fuel to be between 0.4 and 0.85.a. If the price rises 10 percent and the initial quantity sold is 10 million gallons, what is the range of
A major cereal producer decides to lower price from$3.60 to $3 per 15-ounce box.a. If quantity demanded increases by 18 percent, what is the price elasticity of demand?b. If, instead of lowering its
Why would an economist be more hesitant about making an elasticity estimate of the effect of an increase in price of 1 percent than an increase in price of 50 percent?
In the 1960s, coffee came in 1-pound cans. Today, most coffee comes in 11-ounce cans.a. Can you think of an explanation why?b. Can you think of other products besides coffee whose standard size has
In the box “Geometric Tricks for Estimating Price Elasticity,”there are three statements about the elasticities of straight-line supply curves. One of those statements is that supply curves
Price elasticity is not just a technical economic concept. It also reflects the distribution of economic power—the bargaining power and economic opportunities of buyers and sellers.a. When
If elasticities are constantly changing as the time period gets longer, how do managers use a measure of elasticity of demand to determine the price they charge? If they don’t use elasticities, how
In the chapter, you saw that an increase in Vermont’s minimum wage stimulated a small quantity response.a. What does this tell you about the nature of the labor market in Vermont? (Hint: Think
Early economists made a distinction between needs and wants. Needs were economists’ concern; wants were of far less importance.a. Is such a distinction useful?b. Would making such a distinction
In this chapter, we learn that most new cars aren’t sold at their list price but are sold at a discount and that this allows dealerships to charge more to customers with inelastic demand. At the
The text tells us that there are long-run elasticities and short-run elasticities.a. How long is the long run and how long is the short run?b. What meaning do the elasticity measures have if you
For each of the following assume that the supply curve shifts while the demand curve remains constant. What is the direction of the supply shift and relative elasticity of demand? (LO6-5)a. Price
Would a shift in demand have a greater effect on the percentage change in equilibrium quantity for a straightline supply curve that intersects the quantity axis or the price axis? (LO6-5)
Would you expect a shift in supply to have a greater effect on equilibrium quantity in the short run or in the long run? Explain your answer. (LO6-5)
Calculate the income elasticities of demand for the following:(LO6-4)a. Income rises by 20 percent; demand rises by 10 percent.b. Income rises from $30,000 to $40,000; demand increases(at a constant
When the price of ketchup rises by 15 percent, the demand for hot dogs falls by 1 percent. (LO6-4)a. Calculate the cross-price elasticity of demand.b. Are the goods complements or substitutes?c. In
For each of the following pairs of goods, state whether the cross-price elasticity is likely positive, negative, or zero.Explain your answers. (LO6-4)a. Lettuce, carrots.b. Housing, furniture.c. Nike
For each of the following goods, state whether it is a normal good, a luxury, a necessity, or an inferior good. Explain your answers. (LO6-4)a. Vodka.d. Perfume.b. Table salt.e. Beer.c. Furniture.f.
Which of the following producers would you expect to support a tax on beer? Which would not? Explain your answer. (LO6-4)a. Producers of hard liquor. Cross-price elasticity with beer: −0.11.b.
Suppose average movie ticket prices are $8.50 and attendance is 1.2 billion. The price of tickets rises to$9.50 and attendance rises to 1.4 billion. (LO6-3)a. What happened to total revenue?b. If you
How is elasticity related to the revenue from a sales tax? (LO6-3)
University of Richmond Professor Erik Craft analyzed the states’ pricing of vanity plates. He found that in California, where vanity plates cost $28.75, the elasticity of demand was 0.52. In
Once a book has been written, would an author facing an inelastic demand curve for the book prefer to raise or lower the book’s price? Why? (LO6-3)
A newspaper recently lowered its price from 50 cents to 30 cents. As it did, the number of newspapers sold increased from 240,000 to 280,000. (LO6-3)a. What was the newspaper’s elasticity of
Kean University Professor Henry Saffer and Bentley University Professor Dave Dhaval estimated that if the alcohol industry increased the prices of alcoholic beverages by 100 percent underage drinking
Economists have estimated the following transportation elasticities. For each pair, explain possible reasons why the elasticities differ. (LO6-2)a. Elasticity of demand for buses is 0.23 during peak
Which of the pairs of goods would you expect to have a greater price elasticity of demand? (LO6-2)a. Cars, transportation.b. Housing, leisure travel.c. Rubber during World War II, rubber during the
Calculate the elasticity of the designated ranges of supply and demand curves on the following graph. (LO6-1) Price $40 35 30 B 25 G 20 15 F LL 10 I C 5 0 10 20 30 40 50 60 70 80 90 100 110 120
Which has greater elasticity: a supply curve that goes through the origin with slope of 1 or a supply curve that goes through the origin with slope of 4? (LO6-1)
One football season Domino’s Pizza, a corporate sponsor of the Washington Redskins (a football team), offered to reduce the price of its medium-size pizza by $1 for every touchdown scored by the
When tolls on the Dulles Airport Greenway were reduced from $1.75 to $1.00, traffic increased from 10,000 to 26,000 trips a day. Assuming all changes in quantity were due to the change in price, what
A firm has just increased its price by 5 percent over last year’s price, and it found that quantity sold remained the same. (LO6-1)a. What is its price elasticity of demand?b. How would you
Determine the price elasticity of demand if, in response to an increase in price of 10 percent, quantity demanded decreases by 20 percent. Is demand elastic or inelastic? (LO6-1)
In the early 2000s, Whole Foods Market Inc. switched to a medical care plan that had a high deductible, which meant that employees were responsible for the first $1,500 of care, whereas after that
In the late 1990s, the television networks were given$70 billion worth of space on public airways for broadcasting high-definition television rather than auctioning it off.a. Why do airways have
Rent control today looks far different from the rent freeze New York City enacted after World War II. Most rent controls today simply restrict annual rent increases and guarantee landlords a “fair
Most religions argue that individuals should not fully exploit market positions. For example, the text makes it sound as if allowing prices to rise to whatever level clears the market is the best
Biological evolution occurs very slowly; cultural evolution occurs less slowly, but still slowly compared to institutional and market evolution.a. Give some examples of these observations about the
On average, women are paid less than men. What are the likely reasons for that? Should the government intervene with a law that requires firms to pay equal wages to those with comparable skills?
Some economists believe minimum wages create distortions in the labor market. If you are an employer and unable to hire the one willing and able to work for the lowest wage, how else might you choose
You’re given the following supply and demand tables:(LO5-5)a. What is equilibrium price and quantity in a market system with no interferences?b. If this were a third-party-payer market where the
In what ways is the market for public postsecondary education an example of a third-party-payer market?What’s the impact of this on total educational expenditures? (LO5-5)
The city of Pawnee issues a fixed number of fishing licenses each year. (LO5-4)a. Using the accompanying graph, demonstrate the effect of a limit of 100 fishing licenses at a cost of$20 per
Quotas are quantity restrictions on imported goods.Demonstrate the effect of a quota on the price of imported goods. (LO5-4)
Draw the supply and demand curves associated with the tables below. (LO5-3)a. What is equilibrium price and quantity?b. What is equilibrium price and quantity with a $0.75 per-unit tax levied on
Taxes can be levied on consumers or producers. (LO5-3)a. Demonstrate the effect of a $4 per-unit tax on suppliers on equilibrium price and quantity.b. Demonstrate the effect of a $4 per-unit tax on
Graphically show the effects of a minimum wage on the number of unemployed. (LO5-2)
Demonstrate graphically the effect of a price floor. (LO5-2)
Demonstrate graphically why rent controls might increase the total payment that new renters pay for an apartment. (LO5-2)
Demonstrate graphically the effect of an effective price ceiling. (LO5-2)
In the early 2000s a drought in Australia’s rice-growing regions raised the world price of rice from 12 to 24 cents a pound. Demonstrate graphically the effect of the drought on equilibrium price
Kennesaw University Professor Frank A. Adams III and Auburn University Professors A. H. Barnett and David L. Kaserman recently estimated the effect of legalizing the sale of cadaverous organs, which
In 2011 oil production in Libya was interrupted by political unrest. At the same time, the demand for oil by China continued to rise. (LO5-1)a. Demonstrate the impact on the quantity of oil bought
Demonstrate the effect on price and quantity of each of the following events: (LO5-1)a. In a recent popularity test, Elmo topped Cookie Monster in popularity (this represents a trend in children’s
The technology has been developed so that road use can be priced by computer. A computer in the surface of the road picks up a signal from your car and automatically charges you for the use of the
Say that equilibrium price fell and quantity remained constant.What would you say was the most likely cause? (LO5-1)
Say that the equilibrium price and quantity both rose. What would you say was the most likely cause? (LO5-1)
Why is a supply/demand analysis that includes only economic forces likely to be incomplete?
What would be the effect of a 75 percent tax on lawsuit punitive awards that was proposed by California Governor Arnold Schwarzenegger in 2004 on:a. The number of punitive awards. Demonstrate your
In 1994, the U.S. postal service put a picture of rodeo rider Ben Pickett, not the rodeo star Bill Pickett, whom it meant to honor, on a stamp. It printed 150,000 sheets.Recognizing its error, it
In the early 2000s, the demand for housing increased substantially as low interest rates increased the number of people who could afford homes.a. What was the likely effect of this on housing
Oftentimes, to be considered for a job, you have to know someone in the firm. What does this observation tell you about the wage paid for that job?
Some economists believe that imposing international labor standards would cost jobs. In support of this argument, one economist said, “Either you believe labor demand curves are downward-sloping,
Do you think consumers make purchasing decisions based on general rules of thumb instead of price?a. Why would consumers do this?b. What implication might this have for the conclusions drawn about
Knowledge is derived from a tautology when something is true because you assume it is true. In this chapter, you have learned the conditions under which supply and demand explain outcomes. Yet, as
Economics is often referred to as the study of choice.a. In U.S. history, have men and women been equally free to choose the amount of education they receive even within the same family?b. What other
In the late 19th century, Washington Gladden said, “He who battles for the Christianization of society, will find their strongest foe in the field of economics. Economics is indeed the dismal
In a centrally planned economy, how might central planners estimate supply or demand? (Austrian)
State whether “other things constant” is likely to hold in the following supply/demand analyses: (LO4-4)a. The impact of an increase in the demand for pencils on the price of pencils.b. The

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