Chapter 4: Q. d (page 83)
Why do you suppose that the Venezuelan government has begun to provide individuals with coupons giving them the right to purchase only strictly limited quantities of flour, milk, and toilet paper?
Quantity restrictions to ensure effective allocation.
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How do you suppose that when soft drink sellers introduced cans containing 7.5 ounces of soft drink to sell alongside traditional 12-ounce cans, they managed to offer the soft drinks in the smaller cans at prices that were several cents higher per ounce of soft drink?
Why might transaction costs of locating a replacement clothing item increase with the number of particular features that characterize that item?
Other things being equal, is the price of milk in Europe likely to rise or fall in response to the elimination of milk production quotas? Explain your answer.
The consequences of decriminalizing illegal drugs
have long been debated.Some claim that legal
ization will lower the price of these drugs and
reduce related crime and that more people will
use these drugs.Suppose some of these drugs are
legalized so that anyone may sell them and use
them.Now consider the two claims-that price
will fall and quantity demanded will increase.
Based on positive economic analysis,are these
claims sound?
Consider Figure 4-1.The current demand and
supply curves are D₁ and S₁,at which the equilib
rium price and quantity areP,and Q₁.If firms
adopt an improved technique for producing this
good,which curve shifts,and in which direction
does it shift?What happens to the market clearing
price and to the equilibrium quantity?
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