MicroEconomics - Module 2 - Homework Quiz
The diagram in panel a is an example of
A demand schedule
Suppose recent changes to immigration laws have increasedincreased the supply of immigrant labor, decreasingdecreasing wages in manual labor occupations. How might this affect the market for construction? In the figure to the right, show how the wage changes have likely affected the market for construction. Using the line drawing tool, draw either a new supply curve (Upper S2) or a new demand curve (D2). Properly label your line.
See Graph to right for answer
Suppose the figure to the right represents a local cattle market. What would be the effect on this market of the local government regulating a price floor of $1.40 per pound? The market would have a ________________ of ____ thousand pounds. (Enter your response as a whole number.)
Surplus , 20 (thousand)
Consider the market for LCD TVsLCD TVs. Assume the market is perfectly competitive and at a market-clearing equilibrium. What area represents consumer surplus? 1.) Use the triangle drawing tool to shade in consumer surplus. Label this area 'Consumer Surplus'. What area represents producer surplus? 2.) Use the triangle drawing tool to shade in producer surplus. Label this area 'Producer Surplus'.
Consumer Surplus - Top Producer Surplus - Bottom
On the diagram to the right, a movement from B to C represents a
Answer: Change in Supply. ---> If only the price of the product changes, there is a movement along the supply curve, which is an increase or a decrease in the quantity supplied. If any other variable that affects the willingness of firms to supply a good changes, the supply curve will shift, which is an increase or decrease in supply. When firms increase the quantity of a product they wish to sell at a given price, the supply curve shifts to the right.
On the diagram to the right, a movement from A to B represents a
Answer: Change in quantity demanded. -->It is important to understand the difference between a change in demand and a change in quantity demanded. A change in demand refers to a shift of the demand curve. A shift occurs if there is a change in one of the variables, other than the price of the product, that affects the willingness of consumers to buy the product. A change in quantity demanded refers to a movement along the demand curve as a result of a change in the product's price.
Assume the world market for oil is competitive and that the marginal cost of producing (extracting and bringing to market) another barrel of oil is $79.00 and the marginal benefit is $79.60. If one more barrel of oil is produced and consumed.. Part A How will economic surplus change? Part B Economic surplus will
Marginal Benefit minus Marginal Cost = Surplus Part A - $0.60 Part B - Increase
Consider the market for gasoline illustrated in the figure to the right. Suppose the market is perfectly competitive and initially in equilibrium. Now suppose the government imposes a gasoline tax of $0.75 to be paid for by producers. The effect of this tax is illustrated in the figure to the right. Who bears the burden of the tax? Consumers pay $. 50. of the $0.75 tax (enter a numeric response using a real number rounded to two decimal places) and producers pay $0.25 of the tax.
Part A - $0.50 Part B - $0.25
Consider the market for gasoline illustrated in the figure to the right. Suppose the market is perfectly competitive and initially in equilibrium. Now suppose the government imposes a gasoline tax of $1.50 to be paid for by producers. The effect of this tax is illustrated in the figure to the right. Who bears the burden of the tax? Consumers pay $1.00 of the $1.50 tax (enter a numeric response using a real number rounded to two decimal places) and producers pay $0.50 of the tax.
Part A - $1.00 Part B - $0.50
The graph to the right shows the market demand and supply for orangesoranges. Assume that the market for orangesoranges is perfectly competitive. Suppose the orangeorange producers organize themselves and establish a system of quotas. Each farmer's output is restricted by an amount indicated in the graph. Part A - Compared with the market-clearing equilibrium, is the quota system efficient? Part B - Illustrate the loss of efficiency that results from the quota system. Use the triangle drawing tool to shade in the deadweight loss. Label the shaded area 'Deadweight Loss'.
Part A - No Part B - See Graph to right
The figure to the right illustrates the U.S. market for rugs made in a particular foreign country. Suppose the market price of rugs is $2,250. Part A - At a price of $2,250, there will be a ____________ of rugs Part B - To reach an equilibrium, the price of rugs in this market must _______
Part A - Surplus Part B - Fall
Refer to the diagram to the right: Use the line drawing tool to draw a demand curve shifting to the rightright. Label this line 'D2'. Carefully follow the instructions above, and only draw the required objects Part B - With this shift, equilibrium price will _________ and equilibrium quantity will ____________
Part B - increase, increase
