Question 1

1. (Evolution of the Household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answers.
   a. Higher levels of education for women
   b. Higher unemployment rates for women
   c. Higher average pay levels for women
   d. Lower demand for labor in industries that traditionally employ large numbers of women
2. (Household Production) Many households supplement their food budget by cultivating small vegetable gardens. Explain how each of the following might influence this kind of household production.
   a. Both husband and wife are professionals who earn high salaries
   b. The household is located in a city rather than in a rural area
   c. The household is located in a region where there Is a high sales tax on food purchases
   d. The household is located in a region that has a high property tax rate
3. (Household Production) What factors does a householder consider when deciding whether to produce a good or service at home versus by it in the marketplace?
4. (Objective of the Economic Decision Makers) In economic analysis, what are the assumed objectives of households, firms, and the government?
   Question 10
   (Tax Rates) Suppose taxes are related to income as follows:
   Income Taxes
   $1,000 $200
   $2,000 $350
   $3,000 $450
   a. What percentage of income is paid in taxes at each level?
   b. Is the rate progressive, proportional, or regressive?
   c. What is the marginal tax rate on the first $1,000 of income?
   The second $1,000? The third $1,000?
   Chapter 4
   Question 2
   (Substitutes and Complements) For each of the following pair of goods, determine whether the goods are substitutes, complements, or unrelated:
   a. Peanut butter and jelly
   b. Private and public transportation
   c. Coke and Pepsi
   d. Alarm clocks and automobiles
   e. Golf clubs and golf balls
   Question 3
   (Demand Shifters) List five things that are held constant along a market demand curve, and identify the change in each that would shift that demand curve to the right-that is, that would increase demand.
   Question 4
   (Supply) Why is a firm willing and able to increase the quantity supplied as the product price increases?
   Question 12
   (Equilibrium) Assume the market for corn is depicted as in the tab le that appears below.
   a. Complete the table below.
   Quantity Quantity
   Price Demanded Supplied
   per (millions (millions Surplus/ Will Price
   Bushel of bushels) of bushels 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

b. What market pressure occurs when quantity demanded exceeds quantity supplied? Explain
c. What market pressure occurs when quantity supplied exceeds quantity demanded? Explain
d. What is the equilibrium price?
e. At each price in the first column of the table, how much is sold?