j. Change in the quantity demanded of a good that is the result of a change in that good’s price all other influences held constant. 11. Demand Curve
k. A fall in the price of one good makes people more willing to buy the other good. 14. Substitutes
l. Shift in demand curve as a result of a change in a factor other than price of the good. 12. Complements
m. A rise in income increases the demand for a good. 13. Normal good
3. Identify whether the following statement are normative(n) or positive(p).
a. The price of gas is too high. Normative.
b. The Federal Reserve lowered interest rates yesterday. Positive.
c. The long term national debt should be reduced. Normative.
d. Foreign imports are bad for the economy. Positive.
e. Inflation is expected to rise. Positive.
f. More women are enrolled in college than men. Positive.
g. People who smoke pass on increased medical costs to the whole society. Positive.
Suppose that the price of overnight package delivery service is $18 before a $5 excise tax is imposed. With the tax, the price rises to $20. What is the supplier’s burden (incidence) of the tax? Suppliers burden is $3 because $18 + $5 = $23 thus $23 - $20 = $3 What is the consumer’s? It is $2 because originally consumers paid $18, but with tax now pay $2 extra thus consumers burden is $2. Under what circumstances does the burden of an excise tax fall mainly on