A total of 8 Discussion Questions.

Very simple, easy, and straightforward.

Please respond thoroughly and in depth with complete paragraphs

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1. (Shifting Demand) Using demand and supply curves, show the effect of each of the following on the market for cigarettes:

1. A cure for lung cancer is found.
2. The price of cigars increases.
3. Wages increase substantially in states that grow tobacco.
4. A fertilizer that increases the yield per acre of tobacco is discovered.
5. There is a sharp increase in the price of matches, lighters, and lighter fluid.
6. More states pass laws restricting smoking in restaurants and public places.

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2. (Demand and Supply) How do you think each of the following affected the world price of oil? (Use demand and supply analysis.)

1. Tax credits were offered for expenditures on home insulation.
2. The Alaskan oil pipeline was completed.
3. The ceiling on the price of oil was removed.
4. Oil was discovered in the North Sea.
5. Sport utility vehicles and minivans became popular.
6. The use of nuclear power declined.

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3. (Market Equilibrium) Determine whether each of the following statements is true, false, or uncertain. Then, briefly explain each answer.

1. In equilibrium, all sellers can find buyers.
2. In equilibrium, there is no pressure on the market to produce or to consume more than is being sold.
3. At prices above equilibrium, the quantity exchanged exceeds the quantity demanded.
4. At prices below equilibrium, the quantity exchanged is equal to the quantity supplied.

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4. (Aggregate Demand and Supply) Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Which curve shifts, and in which direction? What happens to aggregate output and the price level in each case?

1. The price level changes.
2. Consumer confidence declines.
3. The supply of resources increases.
4. The wage rate increases.

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5. (The National Economy) Why do economists pay more attention to national economies (for example, the U.S. or Canadian economies) than to state or provincial economies (such as California or Ontario)?

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6. (Aggregate Demand and Supply) Review the information on demand and supply curves in Chapter 4. How do the aggregate demand and aggregate supply curves presented in this chapter differ from the market curves of Chapter 4?

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7. (Income Approach to GDP) How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. Consider the following data for the selling price at each stage in the production of a five-pound bag of flour sold by your local grocer. Calculate the final market value of the flour.

Stage of Production Sale Price

Farmer $0.30

Miller $0.50

Wholesaler $1.00

Grocer $1.50

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8. (Expenditure Approach to GDP) Given the following annual information about a hypothetical country, answer questions a through d.

Billions of Dollars

Personal consumption expenditures $200

Personal taxes  50

Exports 30

Depreciation  10

Government purchases 50

Gross private domestic investment  40

Imports   40

Government transfer payments  20

1. What is the value of GDP?
2. What is the value of net domestic product?
3. What is the value of net investment?
4. What is the value of net exports?