978-1259663048 Chapter 5 Solutions Manual Part 2

subject Type Homework Help
subject Pages 6
subject Words 2012
subject Authors David C Colander

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
Issues to Ponder
1. a. Airways have value because they produce revenue and there are only a limited
b. Television networks have incentives to produce high definition television only to
2. a. The graph on the left shows the primary market for tickets, assuming that all
b. The graph on the right represents the scalped ticket market, assuming that only
5,000 of the 10,000 ticket holders and only 50,000 of the 100,000 of those who
c. If scalping becomes legalized, more people would be willing to sell their tickets
Price
Quantity
Demand
$130
10,000 110,000
Price
Quantity
Demand
$2,000
5,000 50,000
$130
S0 S1
$1,000
$200
10,000
1
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
page-pf2
3. a. A weakly enforced anti-scalping law would add an
additional cost to those selling scalped tickets and
push up the resale cost of tickets to include the
expected cost of being caught, which would be fairly
b. A strongly enforced anti-scalping law (against suppliers) would push up prices far
4. a. Boards often exist not only to benefit the consumer, but also to benefit existing
b. Possible changes include eliminating the board of certification, limiting its
c. A political difficulty with implementing these changes is that a relatively small
group of those currently certified will be hurt and will lobby hard for the status
5. a. The Oregon Health Plan includes a prioritized list of medical services that
determine whether a service is covered. The list is based on comparative benefit
to those covered as determined by the Health Care Board. Those services that this
b. Economists should not oppose the Oregon Plan because it involves rationing. The
2
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
page-pf3
c. In the market, the interaction of demand and supply determines the equilibrium
price and quantity that is bought and sold. Those who are able to pay the
6. a. Frequent-flyer programs allow companies to lower their effective prices without
lowering their reported prices. Companies also use them to get business travelers
b. Other examples include points that hotels give to travelers, loyalty cards, and
c. Firms likely do not monitor these programs because it would be too costly to do
7. a. An import quota will increase the price of
imported sugar. The accompanying graph
shows how a higher imported sugar price
b. The government could have imposed a tariff on imported sugar. This would also
3
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
page-pf4
c. A minimum required import level of 1.25 million will limit the ability of the
8. a. As shown in the accompanying graph, the
controlled price (PC) is below equilibrium. At this
b. Since at the existing quantity supplied, QS,
demanders would be willing to pay Pb, there is a
c. Eliminating rent controls would most likely allow the market price of apartments
to increase and eliminate side payments. The quantity supplied will rise until it
d. The political appeal of rent control is that it benefits those who currently rent
9. a. The government subsidy of mohair provided an enormous incentive for those who
4
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
page-pf5
b. This program was likely kept in existence because not many people knew about it
c. A law that requires that suppliers receive $3.60 more than the market price is the
10. Excess supply in U.S. agricultural markets is caused by the government’s policy
11. It would likely increase the number since it reduces the cost of having a car that
12. The demand for rolling machines went up enormously because loose tobacco
13. a. Japan prescribes many more drugs than the U.S. because Japanese doctors have a
b. It would lead to many more drugs being produced, even if they were not really
5
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
page-pf6
c. Drug reps would likely provide free samples and other gifts to doctors and have
14. a. They would likely fall. In fact, they fell by 13 percent.
b. They also would likely fall. In fact, they fell by 22 percent.
c. The graphs below show the effect of increasing co-payments. The graph on the
left has a co-payment of $15. Consumers demand Q1 and the shaded region
shows the medical claim costs. In the accompanying graph on the right,
6
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.