Public Transportation – Principles of Macroeconomics Quiz

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Price, Demand, People, Survey, Public Transportation, Principles of Macroeconomics Quiz

The key terms in this Principles of Macroeconomics course include Price, Public Transportation, Demand, People, Survey, Demand Curve, Principles of Macroeconomics Quiz

A recent study shows the benefits of using public transportation. Government officials have hired your consulting firm to increase the demand for public transportation. They come to you with three of their suggestions.

Suggestion 1. Reduce the price of public transportation.
Suggestion 2. Increase the price of private transportation by increasing tolls.
Suggestion 3. Offer monthly and yearly passes that reduce the price paid per ride of public transportation.

Which suggestion(s) does your firm recommend?

1 and 3





Increasing the price of private transportation, a substitute good, will increase demand for public transportation. Your recommendations should be made on the basis of demand increasing, not quantity demanded increasing. Ask yourself, which variable(s) changes quantity demanded and which variable(s) changes demand?

According to the Food and Drug Administration, “…the ultraviolet (UV) radiation from these devices [sunlamps and tanning beds] poses serious health risks.” As a result of reading this, the local mayor decides to introduce legislation that will put a 10% excise tax on tanning consumers. From an economic point of view, this will

shift the demand curve leftward for tanning.

shift the demand curve rightward for tanning.

shift the supply curve rightward for tanning.

move down along the demand curve for tanning.


The excise tax lowers demand because consumers must now pay a higher tax in addition to the price they pay for the good. People will tan less because they now have to factor in the extra cost. This will be shown as a leftward shift of the demand curve.

As the owner of a hotel, you have decided to lower the price for all rooms in the month of October.  What should you expect to happen?

As the price is lowered, demand for rooms will increase.

As the price is lowered, the demand for rooms will decrease.

As the price is lowered, the quantity demanded of rooms will decrease.

As the price is lowered, the quantity demanded of rooms will increase.


The law of demand states that quantity demanded will increase when price is lowered, all things being equal. In this case, more rooms will be sold. If only the price changes, apply the law of demand.

Refer to the following scenario to answer the following questions.
A government worker surveys a number of households and comes up with the following information: there were a total of 90 people in the households, 10 of the people were children under 16, 10 of the people were retired but still capable of working, 35 people had full-time jobs, 5 had part-time jobs, 5 were stay-at-home parents, 5 were full-time students over the age of 16, 5 were disabled people who could not work, 10 people had no job but were looking for jobs, and there were 5 people who wanted a job but were not looking for a job.

According to the information in the survey, the number of people in the work-eligible population is