quiz1answersspring2008mondaywednesdaylecture - Economics...

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Economics 302 Name _________________________________ Spring2008 Monday/Wednesday Lecture Answers to Quiz #1 Student ID Number ______________________ 1. This question is designed to evaluate your recall of basic supply and demand principles. For each of the following sketch a diagram of supply and demand. Assume each market is initially in equilibrium before the stated event occurs. Draw this initial equilibrium and the subsequent equilibrium after the market adjusts. Provide a summary statement about the effect of the stated event on the equilibrium price and quantity. Label your graphs with the following notation where appropriate: D 1 = the initial demand curve D 2 = the new demand curve S 1 = the initial supply curve S 2 = the new supply curve P 1 = the initial equilibrium price P 2 = the new equilibrium price Q 1 = the initial equilibrium quantity Q 2 = the new equilibrium quantity a. (.25 points) The cost of labor increases for all firms in an industry. At the same time income increases for consumers. Assume this good is a normal good.
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This note was uploaded on 08/08/2008 for the course ECON 302 taught by Professor Gold during the Spring '07 term at University of Wisconsin.

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quiz1answersspring2008mondaywednesdaylecture - Economics...

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