Question 28 1.32 pts The term \"utility\" in economics refers to O consumer sati

Question

Question 28 1.32 pts The term "utility" in economics refers to O consumer satisfaction C government surplus a product's usefulness in the market producer costs D | Question 29 1.32 pts nto which of the following fallacies does this scenario best fall? Safety lids were required to protect children from accidentally ingesting medicines. The elderly have trouble opening the new lids, so they leave the bottles completely open, resulting in an increase in child ingestion of medicines. Fallacy of composition Ignoring secondary effects Correlation-causation fallacy

Explanation / Answer

Question No 28.

The term utility in economics implies the total satisfaction that the consumer receives from consuming a good or a service. The economic utility of a product will directly influence the demand and therefore the price of the commodity.

Question 29.

The above statements imply that there is Correlation-causation fallacy in a case that two events are occurring together are taken to have a cause and effect relationship. The fallacy is that an event that follows another was a consequence of the first event. The reasoning behind the logical fallacy is flawed and it doesn't imply the resulting conclusion is false.

QUESTION 31.

when the tax is imposed the supply curve shifts leftwards i.e., decreases by the amount of tax. The vertcal distance between the two supply curves is the amount of the tax ( $10). The new quantity when the tax is imposed falls. The price will increase but less than $510 as the tax levied is shared both by buyers adn sellers. Both buyers and sellers share the burden of the tax. the buyers pay the higher price after tax and sellers will receive lesser price compared to the original price. Tax on sellers discourages the market activities and as a result equilibrium quantity would fall and the burden of the tax is shared both by buyers and sellers.

question 32.

If the price of a normal good increase then the demand for the product would fall. other things being constant. This can be explained using income effect and substitution effect of a price rise for a normal good. The increased price of commodity A shifts the budget line inwards and consumer moves to a new equilibrium position on a new indifference curve. The subistituion effect is that there is reduction in quantity demanded of commodity A . The income effect is that with an increase in the price of commodity A results in the decline in real income of the consumer . As a result, both income and substitution moves in the same direction and causes the decline in the purchase of commodity A.

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