Effect on opportunity cost for moms Higher level of education

1. Evolution of the Household

Determine whether the below would increase or decrease the opportunity cost for moms who don’t work. Explain your answers.

a. Higher level of education

b. Higher unemployment rates for women

c. higher average pay for women

d. lower demand for labor in industries that employ mostly women

2. Tax Rates. Suppose taxes are related to income as below

income taxes

1000 200

2000 350

3000 450

a. what percentage of income is paid in taxes at each level?

b. is the tax rate progressive, proportional or regressive?

c. what is the marginal tax rate on the first 1000 of income? The second? The Third?

3. Substitutes and complements. For each below determine whether the goods are substitutes, complements or unrelated?

a. pb&j

b. Private and public transportation

c. COke and pepsi

d/ Alarm clocks and automobiles.

e. Golf clubs and golf balls

4. Demand Shifters. List 5 things that are held constant along a market demand curve and identify the change in each that would shift that demand curve to increase the demand.

5. Supply. Why is a firm willing and able to increase the quantity supplied as the product price increases?

6.Equilibrium Assume the market for corn is depicted as in the table below;

Price per bushel Quantity demanded Quantity supplied Surplus/ Will price

Millions millions shortage rise or fall?

1.80 320 200

2.00 300 230

2.20 270 270

2.40 230 300

2.60 200 330

2.80 180 350

  • Complete the table
  • What market pressure occurs when quantity demanded exceeds supply.
  • What market pressure quantity exceeds demand?
  • What is the equilibrium price?
  • What could change the equilibrium price?
  • At each price in the first column of the table below, how much is sold?
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