Principles of Economics by Libby Rittenberg and Timothy Tregarthen. Chapter 7: The Analysis of Consumer Choice which can be downloaded here: Principles of Economics Chapter 7 Suggested reading: Intro

Principles of Economics by Libby Rittenberg and Timothy Tregarthen.Chapter 7: The Analysis of Consumer Choice which can be downloaded here:

Principles of Economics Chapter 7

Suggested reading: Introduction to Economic Analysis, pp. 156 – 172.

Part 1: chapter 7

Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per year—and would thus face a tax increase of about $500 per year from the cigarette tax at the person’s current level of consumption. The income tax measure would increase the person’s after-tax income by $500.

Would the combined measures be likely to have any effect on the person’s consumption of cigarettes? Why or why not?

Principles of Economics by Libby Rittenberg and Timothy Tregarthen.Chapter 8: Production and Cost 

Part 2: Chapter 8

Suppose a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20. If the price of capital is $6 and the price of labor is $2.50, describe how the firm should adjust its mix of capital and labor? What will be the result?

Part 3: chapter 8

Please explain why the law of diminishing returns applies only in the short-term period. Cite reference in apa format.