1) In terms of net benefit, what is the effect of an increase in tastes and pref

Question

1) In terms of net benefit, what is the effect of an increase in tastes and preferences for smart phones on the decision to purchase a smart phone?
a)Increases benefit
b) Decreases explicit cost
c)Decreases benefit
D) Increases opportunity cost
E)No change in either benefit or cost

2) Suppose the tax per unit increases. What is the effect on the tax revenue?
a)Increases
b)Decreases
C)Stays the same
d)Unclear
E)None of the above

3) Consider the market for video game consoles. It has been hit by two major trends. First, a huge increase in the price of the chips used to make them. Second, a decrease in tastes and preferences as people have migrated to playing on smart pads, smart phones and Apple Watches.What is the effect on the price and quantity?

a)P?, Q?
b)P unclear; Q?
c)P?, Q unclear
d)P?, Q?
e)P?, Q?

4) Consider the market for marijuana. Suppose the price of a vaporizer (which is used to consume marijuana) becomes cheaper. What is the effect on P and Q?
a)P?, Q?
b)P?, Q?
c)P?, Q?
d)P?, Q?
e)Not enough information

Explanation / Answer

Ans

1 increases benefit since demand curve shifts upwards

2 unclear since it may increase first and then decline based on conditions which aren't fully mentioned

3 p unclear but Q falls since supply and demand shifts leftwards

4 p and Q both increases since demand for marjuna rises

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