Student: _____________________ Instructor: mustafa afacan
Assignment: Chapter 2 Homework
Date: _____________________ Course: Econ 211-FALL24-L03 (1)
1. New York City started requiring mandatory posting of calories on
menus in chain restaurants inmid-2008. Bollinger,Leslie, and
1
Sorensen(2011) found that New YorkCity's calorie posting S
requirement caused average calories per transaction at
Starbucks to fall by6% due to reduced consumption
ofhigh-calorie foods. Show the effect of New YorkCity's calorie
posting requirement onStarbuck's demand curve.
p, $ per dessert
Consider the market forStarbuck's illustrated in the figure.
p1 e1
Using the line drawing tool, graph a new demand curve
forStarbuck's showing the effect of the event described above.
2
Label this curve 'D .'
Carefully follow the instructionsabove, and only draw the
required object.
Q1 1
D
Q, Desserts
2. According to the Law ofDemand, the demand curve for a goodwill:
A. shift leftward when the price of the good increases.
B. slope downward.
C. slope upward.
D. shift rightward when the price of the good increases.
An increase in the price of a good will leadto:
A. a movement up along the demand curve for that good.
B. a rightward shift of the demand curve for that good.
C. a movement down along the demand curve for that good.
D. a leftward shift of the demand curve for that good.
An increase inconsumer's income will leadto:
A. a movement upward along the demand curve for a normal good.
B. a rightward shift of the demand curve for a normal good.
C. no change of the demand curve for a normal good.
D. a rightward shift of the supply curve for a normal good.
3. SupposeJim's andSam's individual demand curves are shown
in the figure to the right. 14
Use the multipoint curved line drawing tool to draw the total
12
demand curve. Label this line 'DTotal'.
Carefully follow the instructionsabove, and only draw the 10
required object. total supply is the
8 blue one.
Price
6
DSam DJim
0
0 2 4 6 8 10 12 14 16 18 20
Quantity
After plotting the final point of your multipointcurve, press the
Esc key on your keyboard to end the line.
4. Suppose Firm A has a supply curve of
QA = − 2 + p
and Firm B has a supply curve of
QB = 0.5p
How much is the total supply at a price of $5?
Total supply is 5.5 thousand units (enter your response as a real number rounded to one decimal place).
How much is total supply at a price of $15?
Total supply is 19.5 thousand units (enter your response as a real number rounded to one decimal place).
The supply curve of firm A
5. The supply curves for Firm A and Firm B are shown in the figure under the Quota Restriction
to the right. 12
SB SA
Suppose a quota on how much can be supplied by Firm A is
imposed, limiting it to producing quantity of no more than6,000 10
units.
.) Use the multipoint curve drawing tool to completely redraw
1 8
Price ($ per unit)
total supply under
FirmA's supplycurve, showing the effect of the quota. Label it
the quota
'Squota'.
6
.) Use the multipoint curve drawing tool to draw the total supply
2
curve in the case of a quota. Label it 'Stotal'.
4
Carefully follow the instructionsabove, and only draw the
required objects. 2
The total market supply at a price of$4 per unit is
4 thousand units (enter your response as a whole 0
0 2 4 6 8 10 12 14 16
number). Quantity (thousands)
The total market supply at a price of$12 per unit is
After plotting the final point of your multipointcurve, press the
12 thousand units (enter your response as a whole Esc key on your keyboard to end the line.
number).
6. Every house in a small town has a well that provides water at no
cost.However, if the town wants more than 11,000 gallons 10
aday, it has to buy the extra water from firms located outside of
9
the town. The town currently consumes 9,000 gallons per day.
8
Using the dataabove, draw the supply and demand curves as
precisely as possible. Focus on accurately indicating the key 7
points of thecurves, but for therest, it is sufficient to be
cents per gallon
6 D
qualitatively accurate.
5
Forexample, there is not enough information to plot the vertical
intercept of the demand curve but you should be able to draw 4 S
the curve with the proper slope and accurately indicate the
equilibrium price and quantity. 3
2
.) Use the line drawing tool to draw the linear demand curve1 in
1
the figure to the right. Label this line'D'. 1
.) Use the multipoint curved line drawing tool to draw the
2 0
market supply curve2, which includes the supply from thetown's 0 3,000 6,000 9,000 12,000 15,000 18,000
wells. Label this curve'S'. Q, gallons of water per day
Carefully follow the instructionsabove, and only draw the After plotting the final point of your multipointcurve, press the
required objects. Esc key on your keyboard to end the line.
What is the equilibrium3 quantity and equilibriumprice?
The equilibrium quantity is 9000 gallons per day and
the equilibrium price is $ 0 per gallon. (Enter
numeric responses usingintegers.)
1: Definition
The demand curve shows the quantity demanded at each possibleprice, holding constant the other factors that influence
purchases.
2: Definition
The supply curve shows the quantity supplied at each possibleprice, holding constant the other factors that influencefirms' supply
decisions.
3: Definition
An equilibrium is a situation in which no one wants to change his or her behavior.
7. The demand function for a goodis:
Qd = a − bp,
and the supply functionis:
Qs = c + ep,
wherea, b,c, and e are positive constants.
Solve for the equilibrium price and quantity in terms of these four constants.
The equilibrium price(p) is p = (a-c)/(e+b) . (Properly format your expression using the tools in the palette. Hover over tools to
see keyboard shortcuts.E.g., a fraction can be created with the/ character.)
The equilibrium quantity(Q) is Q =(ae+bc)/(e+b). (Properly format your expression using the tools in thepalette.)
8. E
thanol, afuel, is made from corn. Ethanol production increased
9.1 times from 2000 to
S1
2019([Link]
What effect did this increased use of corn for producing ethanol
have on the price of corn and the consumption of corn asfood?
.) Use the line drawing tool to draw either a new
1
demand curve4 (D2 ) or a new supply curve5 (S2 ) that shows
$, price of corn
how the increased use of corn for producing ethanol affects the e1
p1
market for corn as food. Properly label this line.
.) Use the point drawing tool to indicate the new market
2
equilibrium. Label this point 'e2 '.
Carefully follow the instructionsabove, and only draw the
required objects.
D1
What happens to the equilibrium6 price and equilibrium quantity
Q1
of corn asfood?
Q, quantity of corn as food
In the market for corn asfood, the equilibrium price
(1) increase and the equilibrium quantity
(2) decrease .
4: Definition
The demand curve shows the quantity demanded at each possibleprice, holding constant the other factors that influence
purchases.
5: Definition
The supply curve shows the quantity supplied at each possibleprice, holding constant the other factors that influencefirms' supply
decisions.
6: Definition
An equilibrium is a situation in which no one wants to change his or her behavior.
(1) decreases (2) increases
increases does not change
does not change decreases
9. The Application"Occupational Licensing" analyzed the effect of demand shifts to the right.
exams in licensed occupations given that their only purpose was
S2 S1
to shift the supply curve to the left. How would the analysis
change if the exam also raised the average quality of people in
thatoccupation, thereby also affectingdemand?
The figure to the right illustrates the labor market for occupations e2
with licenses. The equilibrium is initially e1 ; however, with w2
occupationallicensing, the supply curve shifts to theleft, raising e1
w1
$, wage
the market equilibrium to e2 .
.) Use the line drawing tool to show how raising the average
1
quality of people in licensed occupations affects the
demand curve7 for workers in licensed occupations. Label this
line 'D3 '.
D1
.) Use the point drawing tool to indicate the new market
2
equilibrium. Label this point 'e3 '. Q2 Q1
Q, Employment
Carefully follow the instructionsabove, and only draw the
required objects.
What happens to the equilibrium8 wage and equilibrium
employmentlevel?
Relative to the equilibrium at e2 , in the labor market for
increase
licensedworkers, the equilibrium wage (1) and
increase
the equilibrium employment level (2) when
demand is affected byhigher-quality workers.
7: Definition
The demand curve shows the quantity demanded at each possibleprice, holding constant the other factors that influence
purchases.
8: Definition
An equilibrium is a situation in which no one wants to change his or her behavior.
(1) does not change (2) increases
decreases does not change
increases decreases
10. After a major disaster such as the Los Angeles earthquake and hurricanes such asKatrina, retailers often raise the price ofmilk,
gasoline, and other staples because supplies have fallen. In somestates, the government forbids such price increases. What is
the likely effect of such alaw?
As a result of the priceceiling,
A. more will be supplied than isdemanded, resulting in a shortage.
B. supply will equaldemand, resulting in neither a shortage nor a surplus.
C. more will be demanded than issupplied, resulting in a shortage.
D. more will be demanded than issupplied, resulting in a surplus.
E. more will be supplied than isdemanded, resulting in a surplus.