Homework answers / question archive / 1

1

Economics

Share With

1.The production possibilities frontiers shown in this exhibit depict a. constant b. increasing c. decreasing d. There is not enough information provided to answer this question.
QUESTION 9 A PPF is a straight line as a result of a. scarcity. b. increasing opportunity costs. C. decreasing opportunity costs. d. choice. e. constant opportunity costs.
QUESTION 16 If price is on the vertical axis and quantity demanded is on the horizontal axis, why is a demand curve downward sloping (left to right)? a. Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and demand, ceteris paribus. b. Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and supply, ceteris paribus. OC. Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and demand, ceteris paribus. d. Because a demand curve is the graphical representation of the law of demand, which specifies a direct relationship between price and quantity supplied, ceteris paribus. e. Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and quantity demanded, ceteris paribus.

2.Suppose the price elasticity of demand for cigarettes is -0.30 and that Malaysians purchase about 15 billion cigarettes a year. (a) If the tax on cigarettes were increased enough to raise the price of cigarettes by 30%, what would be the effect on the quantity of cigarettes demanded? (b) is raising the tax on cigarettes a more effective way to reduce smoking if the demand for cigarettes is elastic or if it is inelastic? Explain with the use of supply and demand analysis.