December 2020

Are cappuccinos and croissants complementary goods? Briefly explain your reasons. For each of the following pairs of products, briefly explain the relationship between them. a. Cappuccinos and black coffees b. Cappuccinos and Swedish trucks c. Cappuccinos and cocoa powder d. Cappuccinos and orange juice

Is it always possible to ascertain whether two goods are substitutes, complementary goods, or that they do not bear any relationship with each other? Briefly explain.

Giffen goods are said to violate the law of demand, aspeople consume more of those goods as their price rises. Could you provide an example of a Giffen good? How would you draw the demand curve of such a good?

Suppose that the following table shows the quantity suppliedof UGG boots at five different prices in 2016 and 2017:

Provide an example of a price ceiling. Why should governmentsenforce price ceilings? Why are black markets crucial for the success of government policies like price floors and price ceilings?

The competitive equilibrium rent for a 1-bedroom apartment in the city of Milan is currently €670 per month. Suppose that the city council decides to enact rent control and establish a price ceiling of €500 per month for 1-bedroom apartments. Briefly explain whether rent control is likely to make each of the following people better

According to a news story, Mexico’s soda tax has resulted in a reduction in the sales of sugary drinks by 6 percent. For each bottle of soda drink, the government collects tax from the seller. Briefly explain the effect that the process of soda tax collection in Mexico has on the price of a bottle

When you drive a car, you generate several negative externalities: You cause some additional air pollution, you increase the chances that other drivers will have an accident, and you cause some additional congestion on roads, causing other drivers to spend more time in traff ic. Ian Parry of the International Monetary Fund and Kenneth Small

Suppose, once again, that Jill and Joe run businesses that are next door to each other on an isolated road, and both need a security guard. Their demand schedules for security guard services are as follows: The supply schedule for security guard services is as follows: a. Draw a graph that shows the optimal level of

Yellowstone National Park is in bear country. The National Park Service, at its Yellowstone Web site, states the following about camping and hiking in bear country: Do not leave packs containing food unattended, even for a few minutes. Allowing a bear to obtain human food even once often results in the bear becoming aggressive about