ANSWERS TO CHAPTER 11

Part 1

1. 

   a. .... 4, $6

   b. ........ 2

   c. ... $8, $3

   d. $5x2=AX=$10

   e. The price consumers pay goes up by $2. $2x2=A=$4

   f. The price suppliers keep goes down by $3. $3x2=X=$6

   g. Because the supply curve is steeper than the demand curve.

   h. SEE FIGURE

   i. SEE FIGURE

   j. ....... BY

2. a.P_D: +

   ..P_S: -

   ..Q: -

   b.D: +

   ..S: 0

   ..P: +

   ..Q: +

3. a. $2

   b. $6

   c. $7

   d. 4.5

   e. 3.5

   f. AREA A

   g. $10

   h. $4

   i. 3

   j. AREA B

   k. AREA CD

   l. zero

   m. T

4. 

   IN THE SHORT-RUN:

   a. Q = 8

   b. P_D = $8

   c. P_S = $4

   d. 8 x $4 = $32

   IN THE LONG-RUN

   e. Q = 7

   f. P_D = $9

   g. P_S = $5

   h. 7 x $4 = $28

   i. T

5. 

   a. 2

   b. 2

   c. $11

   d. $5

   e. 1

   f. 4

   g. $9

   h. $7

   i. See area AB

   j. See area XY

   k. 2

   l. D: -

   ...S: 0

   ...P: -

   ...Q: -

   m. 2

   n. $11

   o. $5

   p. $4 times 2 =$8

   q. T

   r. F. The French government gains the tax revenue and the tunnel is used to transport other things besides Spanish wine.

   6.

   a. 3

   b. $7

   c. $5, unchanged

   d. See CS

   e. See GOVT

   f. There isn't any.

   g. See Z

   h. 1

   7.

   a. 5

   b. $5, unchanged

   c. $3

   d. See CS

   e. See GOVT

   f. See SS

   g. There isn't any.

   h. 2

   i. 2