Problem 4
If the price of a video game increased, what would the law of supply predict about the quantity supplied of the game?
Problem 5
How does a business use marginal analysis to decide how many workers to employ?
Problem 5
Does expectation of a change in price affect supply? Illustrate your answer with examples.
Problem 5
How is the law of supply similar to the law of demand? How is it different?
Problem 7
Categorize the following costs incurred by a bookstore owner as fixed or variable: accountant, electricity for extra holiday hours, wages, clerks' insurance, manager's salary, purchase of books, rent, telephone.
Problem 7
How do each of these examples of government actions affect the supply of gasoline? a. \(\ln 2005,\) the government continued support for ethanol, a gasoline substitute. b. The state of California requires a special blend of gasoline that meets stricter environmental standards than other regions in the country. c. Many states use gasoline taxes to help fund highway construction and maintenance.
Problem 7
Analyzing Causes Between 1997 and 2002 , many gold producers cut their budgets for exploring for new sources in order to stay profitable when the price of gold was less than \(\$ 350\) per ounce. When the price rose above \(\$ 400\) per ounce in \(2004,\) gold producers were not able to respond quickly to the increase. Use what you know about elasticity of supply to explain this causeand-effect relationship.
Problem 8
Why do you think governments want to influence the supply of alcohol and tobacco products by imposing excise taxes?
Problem 8
Analyzing Data In May, Montclair Electronics sold 100 portable DVD players at \(\$ 150\) each. High consumer demand at the start of the summer travel season increased the price to \(\$ 180 .\) In June, the store sold 115 DVD players at the higher price. Is the supply of DVD players elastic or inelastic? Show your math calculations to support your answer
Problem 8
Suppose that you own a video store that has total costs of \(\$ 3,600\) per month. If you charge \(\$ 12\) for each DVD you sell, how many do you need to sell each month in order to break even? Explain how you arrived at your answer.
