Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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Question
Chapter 5, Problem 4QAP
To determine
The exploitation of markets according to the religions.
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During natural disasters such as the flooding in Burma one policy choice is to do nothing, i.e. let prices rise and fall according to increases and decreases in supply and demand.
A second policy choice is to interfere in the market, regulate prices, and prevent the price of goods such as corrugated steel roofing, gasoline, nails, water, food, etc. from rising. The argument frequently made to justify regulating prices is that owners of scarce goods are taking advantage of people in need----taking advantage of innocent people's misfortunes to steal their money and enrich themselves. This is immoral behaviour and should not be allowed.
This second policy usually includes a reliance on government rather than the free market to bring in supplies of scarce goods and distribute them for free or at below market prices to alleviate shortages.
Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.”Do you agree or disagree with this view?
Disagree - the reduction in demand will push the equilibrium price below its original level.
Disagree - this confuses a change in demand with a change in quantity demanded.
Agree - the price increase will ultimately leave cigarette consumption unchanged.
Disagree - higher cigarette prices will actually increase the demand for cigarettes.
Many cities have taxes on products that are considered "bad," like cigarettes and alcohol. These things may be bad for the individual who consumes them (in terms of lowered health), but also imposes costs on society if people who smoke need health care or people who drink cause accidents. Taxes on these sorts of goods are sometimes referred to as "sin taxes." The idea is that taxing the good will cause people to buy less of that bad (sinful) product.
Do you think these taxes work well do produce the desired effect of lowering consumption? What factors may cause a tax to work better or worse as far as lowering consumption? Would these factors cause more or less tax revenue to be raised? If the goal is to reduce consumption, does tax revenue even matter? Would a sin tax work as well on other products like sodas? Why or why not?
You don't have to answer every one of the questions I posed -- pick a couple/few that are of interest to you. I threw a lot in there to get you…
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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- Which of the following arguments could disprove the idea that humans are rational beings? Humans are also relational beings by nature, and in their decision-making, also consider the happiness of other people. Humans are naturally inclined to prioritize their satisfaction. When humans have to make difficult choices, sometimes they do not choose at all. Some humans do not know what they want or desire.arrow_forwardsocial preferences are not really preferences, and unselfish behavior is really motivated by the desire to follow rules and conventions with respect to what is fair. Is this interpretation correct?arrow_forwardOften, wages and the prices of services cost more in cities than in rural areas. Is this a deviation from the law of one price?arrow_forward
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