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Discussion section problem set 3 econ 200

# Discussion section problem set 3 econ 200 - Problem Set 3...

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Problem Set 3 Discussion Sections Economics 200 We will review problems 1-3 in discussion sections beginning Wednesday, October 14. We will review problems 4-6 in discussion sections beginning Wednesday, October 21. 1. Draw a supply and demand diagram of the market for Japanese cars in the United States. Suppose the U.S. government imposes a strict restriction on the quantity of Japanese cars sold in the United States. This restriction would state the maximum number of Japanese cars that the government would allow to be supplied in the U.S. market. Show what happens in this market if the quantity restriction is less than the equilibrium quantity. What will happen if the quantity restriction is greater than the equilibrium quantity? 2. Demand and supply in the yo-yo market are as follows: Price Demand Supply \$1.00 1,000 0 \$1.50 900 0 \$2.00 800 0 \$2.50 700 100 \$3.00 600 200 \$3.50 500 300 \$4.00 400 400 \$4.50 300 500 \$5.00 200 600 (a) Find the initial equilibrium price and quantity. (b) Suppose the government imposes a new \$1.00/unit tax on the producers of yo-yos. Find the new equilibrium price and quantity.

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