Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 4TY
The following table summarizes information about the market for principles of economics textbooks:
| Quantity Demanded per Year | Quantity Supplied per Year | |
| $45 | 4,300 | 300 |
| 55 | 2,300 | 700 |
| 65 | 1,300 | 1,300 |
| 75 | 800 | 2,100 |
| 85 | 650 | 3,100 |
- What is the
market equilibrium price and quantity of textbooks? - To quell outrage over tuition increases, the college places a $55 limit on the price of textbooks. How many textbooks will be sold now?
- While the price limit is still in effect, automated publishing increases the efficiency of textbook production. Show graphically the likely effect of this innovation on the market price and quantity.
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Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.
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Microeconomics: Principles & Policy
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