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