Practice Problems Q1: What do you think happens to the demand for ice creams during the summer season? Why? Q2: Which of the following goods are likely to be classified as normal goods or services? Inferior? Defend your answer. Beans, Tuxedos, used cars, used clothing, Computers, Macaroni and cheese, Calculators, Cigarettes, Caviar, Legal Services. Q3: Which of the following pair of goods are likely to be classified as substitutes? Complements? Defend your answer. Peanut Butter and Jelly, Eggs and Ham, Nike brand and Adidas brand sneakers, IBM and Apple brand computers, Dress shirts and Ties, Airline tickets and hotels, Gasoline and tires, Beer and wine, Faxes and First-class mail, Cereal and milk, Cereal and eggs. Q4: A study found that lower airfares led some people to substitute flying for driving to their vacation destinations. This reduced the demand for car travel and led to reduced traffic fatalities, since air travel is safer per passenger mile than car travel. Using the logic 0 5 10 15 20 25 30 35 40 45 9 8 7 6 5 4 Quantity Price Market Equilibrium Quantity demanded Quantity Supplied suggested by that study, suggest how each of the following events would affect the number of highway fatalities in any one year. a. An increase in the price of gasoline b. A large reduction in rental rates for passenger vans c. An increase in airfares Q5: Children under age 2 are now allowed to fly free on U.S. airlines; they usually sit in their parents’ laps. Some safety advocates have urged that they be required to be strapped in infant seats, which would mean their parents would have to purchase tickets for them. Some economists have argued that such a measure would actually increase infant fatalities. Can you say why?