Author Question: In 1950, a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents. Today, those ... (Read 362 times)

Jipu 123 · **on:** Jun 29, 2018

In 1950, a phone call at a pay phone cost 5 cents and a first-class stamp cost 3 cents. Today, those prices are 50 cents and 49 cents respectively.

What has happened to the price of each good relative to the other? What has happened to the price of each good relative to all other goods?

Question 2

The threat of a large fine for failure to pay income taxes is an example of

A) the excessive power of the Internal Revenue Service.
B) the ineffectiveness of incentives to get people to pay their taxes.
C) a negative incentive to get all people to pay taxes.
D) people failing to consider all the benefits the government provides them.

lucas dlamini · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The price of a phone call has decreased relative to a stamp. In 1950, the price of a phone call was 1.67 stamps, and today the price is 50/44 stamp. The opposite is true for stamps. In 1950 the price of a stamp was 0.60 phone calls and today the price is 44/50 phone calls. We cannot tell what has happened to the prices of phone calls or stamps relative to all other goods without knowing what the money prices of all other goods were in 1950 and today. All we can say is that phone calls have either increased less than stamps or decreased more than stamps.

Answer to Question 2

C