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    Chapter 3 Questions
    1-)(Tax Rates)Suppose taxes are related to income level as follows:
    Income Tax
    $1000 $200
    $2000 $350
    $3000 $450a. What percent of income is paid in taxes at each level?b. Is the tax rate progressive proportional or regressive?2-) What are the major functions of the government? Briefly discuss.3-) What are the advantages and disadvantages of forming a corporation?
    4-) What are the major sources of the federal government revenue?
    5-) What are the major sources of the state revenue?
    6-)Please read the article below and answer the question below.The Electronic Cottage
    The Industrial Revolution shifted production from rural cottages to urban factories. But theInformation Revolution spawned by the microchip andthe Internet has decentralizedthe acquisition analysis and transmission of information. These days someone who claims to work at a homeoffice is not necessarily referring to corporate headquarters but to a spare bedroom. According to a recent survey the number of telecommutershas more than doubled in the last decade. Nearly half the white-collar employees at AT&T work at home at least part of the time.
    Worsening traffic higher gas prices wider access to broadband and even the threat of terrorism are pushing the trend. The average commuteis 23 miles and eliminating that can save about $1000 a year in gas and can avoid putting more than 6000 pounds of carbon dioxide into theatmosphere.
    From home people can write a document with coworkers scattered throughout the world then discuss the project online in real time orhave a videoconference (McDonalds saves millions in travel costs by videoconferencing). Software allows housands of employees to shareelectronic files. When Accenture moved headquarters from Boston to a suburb the company replaced 120 tons of paper records with an onlinedatabase accessible anytime from anywhere in the world.
    To support those who work at home an entire industry has sprung up with magazines newsletters Web sites and national conferences. Infact an office need not even be in a specific place. Some people now work in virtual offices which have no permanent locations. With cellphones and BlackBerries people can conduct business on the roadliterally deals on wheels. Accountants at Ernst & Young spend most oftheir time in the field. When returning to company headquarters they call a few hours ahead to reserve an office. Web-based software such asThinkFree and Zoho Virtual Office keep files and software on a remote server so people on the road can access their files. These road warriorsdont even need a laptop just a dumb terminal that accesses the Internetthe sort of access you might find at Starbucks or the public library.
    Chip technology is decentralizing production shifting work from a central office either back to the household or to no place in particular.
    More generally the Internet has reduced the transaction costs whether its a market report authored jointly by researchers from around theworld or a new computer system assembled from parts ordered over the Internet. Easier communication has even increased contact amongdistant research scholars. For example economists living in distant cities were four times more likely to collaborate on research during the1990s than during the 1970s.
    QUESTION:How has the development of personal computer hardware and software reversed some of the trends brought on by the Industrial Revolution? Briefly discuss.
    Chapter 4 questions:
    1- ) Using demand and supply analysisbriefly discuss the effect of each of the following on the market for cigarettes:a)A cure for lung cancer is found.b)The price of cigars increases.c)Wages increase substantially in states that grow tobacco.d)A fertilizer that increases the yield per acre of tobacco is discovered.
    2- ) How do you think each of the following affected the world price of oil?a)A major war began in the oil-rich Middle East.b)The Alaskan oil pipeline was completed.c)The ceiling on the price of oil was removed.d)Oil was discovered in the North Sea.
    3- ) Suppose that there are freezing temperatures in Florida. At the same time the press reports that drinking orange juice significantly reduces the risk of stomach cancer. Predict the effect on equilibrium price and quantity.4- )Can you give you an example of inferior good? What goods do you buy less when you make more income?5- ) What are the differences between a quantity demanded and demand in general?6- )Do you think a supply/demand model is too simple to explain the real word? Briefly express your own ideas.7-) What is the relationship between technology and supply in general? Briefly explain.8-) We know tastes and preferences play an important role in demand. Can you think of any possible future popular product? (Free Response Question)9-) In what markets expectations are very important? Can you think of an example?(Free Response Question)
    10-) Which one do you think more important in effecting price? Producers or Buyers? or Both? Briefly discuss.(Free Response Question)

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