Complete the first row of the following table by entering the price paid by consumers, the price received by producers, and the quantity of beer sold in the absence of a tax on this market. Tax (Dollars per case) Price Paid by Consumers (Dollars per case) Price Received by Producers (Dollars per case) Quantity of Beer Sold (Thousands of cases) Suppose the federal government requires beer drinkers to pay a $4 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.) As a result of the tax, the price consumers pay Complete the second row of the above table by entering the price paid by consumers, the price received by producers, and the quantity of beer sold when beer drinkers pay a $4 tax on each case of beer.

Explain all the reasons why a decrease in a products price would lead to an increase in purchases.

Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?

Consider the demand for hamburgers. If the price of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburger? Why or why not? Illustrate your answer with a graph.

Who determines how much utility an individual will receive from consuming a good?

Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?

Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round—trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.