1. Jeff Smith
7/7
ECO 202
Chapter 2a
5. a. The wage rate is the independent variable, and the quantity of labor is the
dependent variable.
40
35
30
25
Quantity of
20
Labor
15
10
5
0
0 20 40 60 80
b.
c. it increases, 1/3
d. it decreases, -4/15
8. a. 31,000/9610 – positive slope, income tax owed is positively related to annual salary
b. 19,000/2850 – positive slope, so income tax owed is positively related to annual salary
c. as salary increases, the slope increases, and this implies that people have less incentive
to earn a higher salary due to higher income taxes
Chapter 3
3. a. because there are a lot more lobsters being supplied, and the rise in supply outpaces
the rise in demand, so prices go lower
b. demand for Christmas trees goes lower, bringing the price down
2. c. fall in demand outpaces the increase in cost caused by the weather and reduction in
supply
9. a. the price point not too high because it is the equilibrium price for the tickets
b. the price point is too low because it is below equilibrium, and there will be a shortage
of tickets, since everyone who is willing to pay $50 will not be able to see the show
c. set a lower price point for the same number of seats, or sell more seats at more venues
d. yes, because people would still want to see them, maybe at a slightly lower price point
though
e. demand would increase, and prices would rise