Eco_1_problem_set_2

Eco_1_problem_set_2 - equilibrium price ( P* ), the price...

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Eco 1 Spring 2008 Problem set 2 This problem set is due at the start of your recitation. Review your text – particularly Making the Connection 3.2 on page 83, before attempting these questions. - 1 ) Textbook question 4.7 on page 95. 2 ) Similarly show what we would expect to have observed in the market for ‘regular’ televisions. 3) Textbook problem 4.3 (page 94-95).
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Eco 1 Spring 2008 Problem set 2 4 ) Suppose the government sets a price floor for milk that is above the competitive equilibrium price. a. Draw a graph showing this situation. Be sure that your graph shows the competitive
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Unformatted text preview: equilibrium price ( P* ), the price floor ( P f ), the quantity that would be sold in competitive equilibrium ( Q* ), and the quantity that is sold with the price floor ( Q f ). b. Compare the economic surplus when there is a price floor with the economic surplus in the market if/when there is no price floor. Use algebra to identify areas of the graph (see Figure 4.7 on page 107). 5) Textbook problem 3.18 on page 128....
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Eco_1_problem_set_2 - equilibrium price ( P* ), the price...

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