Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 1.7P
To determine
Labor productivity and holiday.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A firestorm of controversy erupted recently on social media outlets and the national press as three teens died attempting to complete the Monster Challenge, which involves recording a person's mass consumption of energy drinks in a very small window of time. Five others were rushed to the hospital. Deeper investigation by media outlets has shed light on the disturbing number of Americans who are hopelessly addicted to energy drinks.
Lawmakers, including Senator Miller (D-CA), have called for an aggressive tax on energy drinks to stop this scourge that is ravaging the community. The Miller Bill would place a two dollar tax on energy drink tall cans (that on average cost $2.50) in all American markets. Other members of Congress led by Senator Cruz (R-TX), however, believed that tax to be too high, so the Miller Bill was amended to decrease the size of the tax to just one dollar.
Therefore, Senator Miller has asked his team of young, expert economists (that's you all) to project the…
Two months ago, on July 1, 2019, the State of Illinois raised gasoline taxes by $.19 (19 cents) per gallon of gas.
Now it is past July 2019 and the market has changed. The gasoline tax is in place for all Illinois gasoline stations. In addition to the gasoline tax increase, Illinois dealers on average are noticing that many of their customers are going across the border to buy gasoline in Wisconsin, Iowa, Missouri and Indiana. Not all customers can do this, as they live far from a border. But there is a clear impact on the market for Illinois gasoline producers. Build a graph showing the impact of the Illinois gas tax increase and the shift of some Illinois consumers to border state gas stations, clearly indicating any shifts in the demand and/or supply curves and the resulting equilibrium Price and Quantity. Provide a narrative explaining the shifts.
(Both a graph and a narrative are needed for this question)
Florida, like several other states, has passed a law that prohibits “price gouging” immediately before, during, or after the declaration of a state of emergency. Price gouging is defined as “selling necessary commodities such as food, gas, ice, oil, and lumber at a price that grossly exceeds the average selling price for the 30 days prior to the emergency.” Many consumers attempt to stock up on emergency supplies, such as bottled water, immediately before and after a hurricane or other natural disaster hits an area. Also, many supply shipments to retailers are interrupted during a natural disaster. Assuming that the law is strictly enforced, what are the economic effects of the price gouging statute? Explain carefully.
Chapter 10 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- When Star Wars Episode II: Revenge of the Sith opened at 12:01 a.m., Thursday, May 19, 2005, the most fanatical Star Wars fans paid $50 million for tickets to stay up until 3:00 to 4:00 a.m. Businesses around the country, especially those tied to hightech industries, suffered reduced productivity due to absent (suffering from Darth Vader flu) or groggy workers on Thursday and Friday. By one estimate, fan loyalty cost U.S. employers as much as $627 million (Josie Roberts, Pittsburgh Tribune-Review, May 19, 2005). Is this productivity loss an example of a negative externality? Explain.arrow_forwardThe drug war There is a debate in the US and in Europe as to how to influence the market for drugs such as cocaine. Some argue that the answer is to reduce the supply of drugs from Colombia – which would otherwise eventually find their way onto the world markets – by giving aid to the Colombian government to fight the drug suppliers. If this is successful, it will drive up the price of cocaine on the streets. Higher prices mean that fewer people will be willing and able to buy drugs, resulting in a fall in demand. This scenario can be seen in Figure 1.13(a) where a successful anti-drug policy in Colombia would decrease supply, i.e. shift the supply curve for cocaine upwards and to the left so that there is an excess demand for cocaine at price P. This will result in a rise in the equilibrium price of cocaine from P to P1. The quantity demanded will contract along the demand curve D from Q to Q1 as price rises from P to P1. Critics of these ideas argue that programmes…arrow_forwardIn 1990, the U.S. Congress imposed an excise tax on yachts built in the U.S. and other high-priced luxury products such as jewelry and fur coats with a price over $100,000. The Joint Congressional Committee on Taxation predicted that these so-called “luxury taxes” would raise more than $30 million for the federal government in 1991. In fact, these taxes generated only about $16 million in revenue. Furthermore, about 7500 jobs in the U.S. boat-building industry were lost, so those workers paid less in income taxes. Putting this all together, the luxury tax led to a decrease of $7 million in government revenue rather than the predicted $30 million increase. Why didn’t the plan to raise government revenue by imposing an excise tax on luxury goods work as planned? Explain what mistake Congress made in setting the tax on luxury products.arrow_forward
- December, 2006, was a difficult month for Colorado’s beef industry. Multiple heavy snow storms caused thousands of beef cattle to be stranded in nose-high snow drifts. They could not get food or water for themselves. In spite of valiant attempts by the National Guard to drop hay, many died. Beef market prices in the spring were predicted to rise. The series of unfortunate events continued: after the spring thaw, Colorado cattlemen experienced a couple of cases of mad-cow disease. Beef market prices fell (contrary to the earlier prediction). Diagram in (a) the initial impact of the bad winter on the price and quantity. Then, on the same grid, incorporate the impact on price and quantity of the mad-cow cases. Be sure that your final diagram indicates a market price decrease. Using economic terminology, write a statement in (b) explaining the results of your graphical analysis in (a).arrow_forwardDecember, 2006, was a difficult month for Colorado’s beef industry. Multiple heavy snow storms caused thousands of beef cattle to be stranded in nose-high snow drifts. They could not get food or water for themselves. In spite of valiant attempts by the National Guard to drop hay, many died. Beef market prices in the spring were predicted to rise. The series of unfortunate events continued: after the spring thaw, Colorado cattlemen experienced a couple of cases of mad-cow disease. Beef market prices fell (contrary to the earlier prediction). Diagram in (a) the initial impact of the bad winter on the price and quantity. Then, on the same grid, incorporate the impact on price and quantity of the mad-cow cases. Be sure that your final diagram indicates a market price decrease. Using economic terminology, write a statement in (b) explaining the results of your graphical analysis in (a). a) GRAPHICAL ANALYSIS b) WRITTENarrow_forwardCompanies in the steel and alumina industry may react to an increase in the price of crude oil by increasing their prices to reflect the increased cost of production. This, in turn, may lead to higher prices for consumers. Alternatively, companies may seek to reduce their production costs by implementing cost-saving measures, such as switching to alternative sources of energy or reducing their energy consumption. In some cases, companies may seek government intervention, such as relaxing import controls or offering subsidies, to help them cope with the increased cost of production. Ultimately, the reaction of companies in the steel and alumina industry will depend on a range of factors, including the specific circumstances of each company, the availability of alternative sources of energy, and the actions of their competitors. An increase in the price of crude oil will increase the cost of production for the steel and alumina industry, which will increase the price of their products…arrow_forward
- The reaping, processing and sale of sugarcane is a booming sector. However, the late 1990s and early 2000s saw a crisis for sugarcane producers. During this period, the quantity supplied of sugarcane outweighed quantity demanded and the market was in turmoil. Over time the price of sugarcane recovered after 2014, peaking in July 2018. In part, this was due to farmers diversifying into other crops; in part, it was due to buoyant global demand for alternate products. In 2019, however, a combination of good harvests and a fall in fertilizer sugarcane prices caused supply to increase substantially. Although demand was still growing in developing countries, the onset of recession in developed countries was halting the growth in demand. Illustrate and explain (i) how the sugar cane market changed during the period 2014 – 2018 and (ii) what would be required to maintain the original equilibrium price.arrow_forwardWorld famous Burpee Beer is brewed in the small town of West Burpee. Currently, the town of West Burpee levies a $2 per-case tax on all Burpee Beer, and the brewery sells 20,000 cases a year at a price, that includes the tax, of $20 per case. The mayor of West Burpee has decided to erect a statue of himself in the town square at a cost of $20,000, and wants to raise the money from additional tax revenue from sales of Burpee Beer. He has asked each of the three town council members to come up with a plan to raise the additional $20,000. Council member Simpson advises increasing the percase tax by $1. Council member Milhouse advises raising the tax by $2 per case. Council member Flanders advises reducing the current tax by $0.50 per case. For all of the following questions, keep in mind that the objective is to raise a total of $75,000 in tax revenue. Additionally, assume supply is perfectly elastic. If the mayor chooses Simpson's plan, the total cases of beer that would need to be…arrow_forwardSituation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Because price controls were in effect at the time the embargo occurred, an economist would predict that the number of dollars one would need to pay at the pump for a full tank of gasoline would increase sharply. the number of dollars one would need to pay at the pump for a full tank of gasoline would decline sharply. O long waiting lines and black markets would appear. a surplus of gasoline would result.arrow_forward
- Demand and the price of motor fuel From 2007 to 2008, the price of gasoline in the United States rose from $2.76 per gallon to $3.20 per gallon. The quantity used decreased from 3,389 million barrels to 3,290 million barrels. In 2009, the price fell to $2.30 per gallon, yet the quantity used continued to decline, to 3,283 million barrels. After-tax personal income increased from 2007 to 2008, but it fell from 2008 to 2009. Which one or more of the following hypotheses do you think best explain(s) the pattern of gasoline sales? Illustrate your chosen hypothesis with an appropriate diagram. a. In 2008, the demand curve for gasoline had the usual negative slope. However, in 2009, the demand curve shifted to a positively sloped position. b. The demand curve had a negative slope at all times, but because gasoline is a normal good, the demand curve shifted to the right in 2008 and then to the left in 2009arrow_forwardDue to fear about mad cow disease, Japan stopped importing animal feed from Britain in 1996, beef imports and processed beef products from 18 countries including EU members starting in 2001, and similar imports from Canada and the United States in 2003. After U.S. beef imports were banned, McDonald’s Japan and other Japanese importers replaced much of the banned U.S. beef with Australian beef, causing an export boom for Australia (“China Bans U.S. Beef,” cnn.com, December 24, 2003; “Beef Producers Are on the Lookout for Extra Demand,” abc.net.au, June 13, 2005). Use supply and demand curves to show the impact of these events on the domestic Australian beef market.arrow_forwardSummer 2010 was marked by a runaway British Petroleum (BP) oil well in the Gulf of Mexico. It was not plugged until mid-August, after spewing crude oil into the Gulf for over three months. The Gulf fishing industry was devastated. Oyster, shrimp, and Red Snapper production was virtually halted because consumers feared that harvested sea food would be contaminated. Gulf oysters were not available in fish markets, oyster bars in New Orleans closed, wholesalers also closed and fishing boats stayed at their docks. Massive layoffs hit the industry. Workers found temporary employment with BP cleaning up oil and trying to save coastal wildlife from an oily doom. Strangely, the market price of oysters stayed about the same throughout the ordeal, in spite of a large decrease in supply, although a sharp price increase was anticipated. Explain this situation with a demand and supply diagram. Your written statement summarizing the analysis must be consistent with your graphical analysis.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education