Chapter 4--Supply and Demand...Practice

Chapter 4-Supply - Chapter 4-Supply and Demand Practice I Why do Colleges use GPAs ACTs and SATs for Purposes of Admission A Colleges and

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Chapter 4—Supply and Demand: Practice I. Why do Colleges use GPAs, ACTs, and SATs for Purposes of Admission? A. Colleges and universities charging students less than the equilibrium tuition for admission create a shortage of spaces at the colleges or universities. Consequently, colleges and universities have to impose some nonprice rationing device, such as GPAs, or ACT and SAT scores. II. Legalization of Marijuana B. If the purchase and sale of marijuana are legalized, the price of marijuana may rise, fall, or remain the same. The price will depend on whether the rise in the demand for marijuana is more, less than, or equal to the rise in supply of marijuana. III. Where Did You Get That Music? A. The recording industry can do, and has done, three things to reduce the amount of music piracy. 1. Raise the price of downloading music. The industry has done this by pursuing legal suits against some individuals. 2. Reduce the supply of music that can be downloaded. The industry has done this by bringing suit against companies such as Napster. 3. Reduce the demand for downloadable music. The industry has done this by running TV commercials that send the message that if you download music you are affecting everyday workers in the recording industry in a negative way. IV. Television Shows During the Olympics A. If a television network expects that demand for a time-specific slot is likely to be low, it is more likely to run a rerun than a new episode of a program. V. The Minimum Wage A. A minimum wage (above equilibrium wage) reduces the number of unskilled workers working or reduces the number of unskilled labor hours purchased by employers. VI. Equilibrium (Loud Talking in a Restaurant)
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This note was uploaded on 04/16/2008 for the course ECO 1307 taught by Professor Rice during the Fall '07 term at SMU.

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Chapter 4-Supply - Chapter 4-Supply and Demand Practice I Why do Colleges use GPAs ACTs and SATs for Purposes of Admission A Colleges and

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