1. Using diagrams, show what changes in price and quantity would be expected in the following markets under the scenarios given. Also, say whether this represents a change in demand or a change in quantity demanded.
(a) Natural Gas: Fracking technology is improved allowing easier access to natural gas reserves.
(b) Rice: Reports surface about traces of arsenic (a poison) in rice.
(c) Wheat (substitute to rice): Reports surface about traces of arsenic (a poison) in rice.
(d) Soy sauce (complement to rice): Reports surface about traces of arsenic (a poison) in rice.
(e) Clothing: Labor costs for clothing manufacturers increase.
2. The market for soda has supply and demand curves given by
P = 0.02Qs
P =3?0.01Qd
(a) Graph the demand and supply curves.
(b) What is the equilibrium price and quantity for sodas?
(c) How many units of soda will be traded if the government imposes a price floor of $2.50? What about if the government imposes a price ceiling of $0.80?
3. Returning to question 2, suppose the government put a tax on soda of $0.50 per can to be paid by consumers. Graph the before and after-tax supply and demand curves. What are the new equilibrium price and quantity?
4. You have had four equally weighted tests in a course and your test average in the class has fallen from 90 to 88 to 84 to 81 where it is now. What score did you get on each exam? You have a final left that is weighted the same as the other tests. What is the highest grade you can get in the course of the five exams that make up the entire grade?
1. Using diagrams, show what changes in price and quantity would be expected in the following markets under the scenarios given. Also, say whether this represents a change in demand or a change in quantity demanded.
(a) Natural Gas: Fracking technology is improved allowing easier access to natural gas reserves.
(b) Rice: Reports surface about traces of arsenic (a poison) in rice.
(c) Wheat (substitute to rice): Reports surface about traces of arsenic (a poison) in rice.
(d) Soy sauce (complement to rice): Reports surface about traces of arsenic (a poison) in rice.
(e) Clothing: Labor costs for clothing manufacturers increase.
2. The market for soda has supply and demand curves given by
P = 0.02Qs
P =3?0.01Qd
(a) Graph the demand and supply curves.
(b) What is the equilibrium price and quantity for sodas?
(c) How many units of soda will be traded if the government imposes a price floor of $2.50? What about if the government imposes a price ceiling of $0.80?
3. Returning to question 2, suppose the government put a tax on soda of $0.50 per can to be paid by consumers. Graph the before and after-tax supply and demand curves. What are the new equilibrium price and quantity?
4. You have had four equally weighted tests in a course and your test average in the class has fallen from 90 to 88 to 84 to 81 where it is now. What score did you get on each exam? You have a final left that is weighted the same as the other tests. What is the highest grade you can get in the course of the five exams that make up the entire grade?
