Question

         

39..	How is the unemployment rate related to the opportunity cost of college? (1 point)
	A)	As the unemployment rate increases, the opportunity cost of attending college falls because fewer opportunities for employment exist.
	B)	As the unemployment rate decreases, the opportunity cost of attending college falls since it becomes easier to pay for tuition when employed.
	C)	As the unemployment rate increases, the opportunity cost of attending college increases because fewer people are giving up the opportunity of working to attend college.
	D)	As the unemployment rate increases, the opportunity cost of attending college increases because more people are giving up the opportunity of working to attend college.

40.	If the demand for heroin is inelastic and heroin users get the money to pay for heroin by committing crimes, policymakers who want to reduce crime should:
	A)	make it harder to find heroin.
	B)	tax heroin.
	C)	try to lower the price of heroin.
	D)	try to raise the price of heroin.

41.

Table: Elasticities of Good X   (4 points)

	Good X
Price elasticity of demand	2.5
Income elasticity of demand	0.5
Cross-price elasticity of demand with Good Y	1.5
Price elasticity of supply	1

Refer to the table above. From the information in the table, what can you say about good X? In particular, is the demand for Good X rather elastic or inelastic? What does this imply about the number of substitutes that exist for Good X? Does Good Y appear to be a substitute for Good X? Does Good X appear to be a normal or inferior good? Finally, is the elasticity of supply for Good X relatively elastic or inelastic?

42.

A market can be described by the equations Q_d = 100 – P and Q_s = –20 + P. Calculate the equilibrium price and quantity in this market        

    

43- Explain the change in tactics Nobel Prize–winning economist Gary Becker suggests concerning the method of fighting the war on drugs. What is so attractive about this alternative?    

Answer 1

1.
The answer is A.
A) As the unemployment rate increases, the opportunity cost of attending college falls because fewer opportunities for employment exist.
2.
The answer is C.
C)try to lower the price of heroin.
3.
The demand for Good X is rather elastic.
There are larger number of substitutes available for good X.
Yes,good X and Y are substitutes.
No the good is a normal good.
The elasticity of supply for Good X is relatively elastic.
4.
At equilibrium Qs=Qd
100-P=20+P
2P=80
P=40
Q=20+40=60