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1. The document contains a homework assignment on microeconomics topics including supply and demand analysis, price floors and ceilings, and rent controls.
2. It includes 15 questions about how supply, demand, price, and quantity would change given different scenarios in various markets.
3. An additional 10 questions analyze a minimum wage policy and rent control policies, including who they would benefit and hurt.
1. The document contains a homework assignment on microeconomics topics including supply and demand analysis, price floors and ceilings, and rent controls.
2. It includes 15 questions about how supply, demand, price, and quantity would change given different scenarios in various markets.
3. An additional 10 questions analyze a minimum wage policy and rent control policies, including who they would benefit and hurt.
1. The document contains a homework assignment on microeconomics topics including supply and demand analysis, price floors and ceilings, and rent controls.
2. It includes 15 questions about how supply, demand, price, and quantity would change given different scenarios in various markets.
3. An additional 10 questions analyze a minimum wage policy and rent control policies, including who they would benefit and hurt.
Use this figure and response column to answer the questions below. (Each scenario should cause no response, a movement from a to points e or d, or a shift from a to b or c.)
Starting in each instance at point a, what will happen to supply when:
1. New firms enter the industry? 2. Price increases? 3. The price of a substitute in production increases? 4. Price decreases? 5. The price of an input increases? 6. Losses cause some firms to exit the industry? 7. New technology reduces the costs of production? POSSIBLE RESPONSE
a. no response b. increase in supply (shift to b) c. decrease in supply (shift to c) d. movement to d (increase in quantity supplied) e. movement to e (decrease in quantity supplied)
HomeWork Set II-3: Supply and Demand Analysis 51 Shortage, Surplus, and Equilibrium
Use this figure to answer the following questions.
8. The quantity demanded at a price of $50 is? 9. By how many units will quantity demanded exceed quantity supplied if the price is $30? 10. The price (in dollars) at which quantity supplied equals 30 is? 11. The price (in dollars) at which a surplus will occur is?
Use this figure, which illustrates the peanut market, to answer the following questions. For each question assume that the market begins at D 0 and S 0 .
12. What will be the new equilibrium price if peanut workers receive a wage increase? 13. What will be the new equilibrium quantity if eating peanuts is predicted to prevent AIDS while at the same time new endangered species protections greatly reduce the land available for peanut production? 14. What will be the new equilibrium quantity if the price of U-Haul trailer rentals increases by 50%? 15. What is the new equilibrium price if peanuts are an inferior good and real income per capita declines?
52 HomeWork Sets for Microeconomics Price Floors and Price Ceilings
This figure represents a labor market for unskilled workers. Currently the government has set a minimum wage of W 3 in this labor market, but is considering elimination of the minimum wage legislation.
16. Is a minimum wage a price floor or a price ceiling? 17. The number of jobs available could be increased if the minimum wage was eliminated because quantity demanded of labor would increase from Q 1 to? 18. An elimination of the minimum wage in this market should decrease the quantity supplied of labor from Q 2 to? 19. The horizontal distance between which two points measures the possible unemployment caused by the minimum wage of W 3 ? 20. Will some workers be better off if a minimum wage is eliminated? (yes/no) 21. Will some workers be worse off if a minimum wage of W 3 is eliminated? (yes/no) 22. What will be the market wage rate after the market adjusts to an elimination of the minimum wage?
Assume the market wage is currently W 2 and no minimum wage laws are in effect.
23. What should happen to the wage rate over time? (no change, increase, decrease)
Question for Thought Which workers would oppose a reduction or elimination of the minimum wage? (Who might be made worse off by the elimination of the minimum wage?)
Fleeing stagnation in California, economic refugees have descended in record numbers upon the towns and cities of the Rocky Mountains. Accompanying the rapid rise in population has been a concomitant rise in the prices paid for rental housing. Long time residents in many towns are beginning to call for rent controls so that living remains "affordable" in their town.
24. Are rent controls a price ceiling or a price floor? 25. Who will benefit from the rent controls? Answers for HomeWork Set II-3
HomeWork Set II-3: Supply and Demand Analysis 53 (a) yes (a) 20 (a) price floor (b) no (b) 25 (b) price ceiling (c) W 1 (c) 30 (c) Q 1
(d) W 2 (d) 80 (d) Q 0
(e) W 3 (e) 60 (e) Q 2
(a) 0 (a) 40 (a) Q 3
(b) 10 (b) 50 (b) P 0
(c) increase (c) de (c) P 1
(d) decrease (d) ec (d) P 2
(e) no change (e) bc (e) P 3
(a) all renters (b) all landlords (c) all renters able to find apartments at controlled prices