Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also
offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?
A) He would lose some but not all his customers.
B) Initially, his customers might complain but over time they will come to accept the new rate.
C) If Jason raises his price, he would lose all his customers.
D) If Jason raises his price, then all others supplying the same service will also raise their prices.
Answer: C
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Let S = y - (100 + 0.5y). Assume no government or foreign sectors. At the equilibrium level of income, y* = 800, the level of saving is
A) 0. B) 50. C) 100. D) 300.
Refer to the table above. If Beth earns $60,000 per annum, she has to pay a tax of ________
A) $9,464.50 B) $1,600.50 C) $1,000.50 D) $24,000