hw 4 - 1eExercise I:}C:I Exercise Score: CI 0F 1. pt...

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Unformatted text preview: 1eExercise I:}C:I Exercise Score: CI 0F 1. pt Assignment Score: 31.4% (1.6.28 0F 20 p13) 20 of 20 complete I Refer to the figure to the right. The graph shows an Price [per cup oftea} 0.:- individual's demand curve for tea. At a price of two dollars, the consumer is willing to buy five cups of tea per week. More precisely, what does this mean? It means that marginal henefit equals marginal cost when five cups are consumed. 3‘ It means mat the total cost of consuming five cups is $2.00. It means that the marginal cost ofproducing five cups is $2_{H}_ * It means mat the marginal benefit ofconsuming me fifth cup is $2.90. Quantity [cups per-meek} d@@@@@@@@@@bm .mm I:x:l Exercise Scare: I3 0F 1. pt Assignment Score: 81.4% (1.6.28 0F 20 pfsj 2|) 5F 20 complete ll: The figure to the right illustrates the market for a breast Price "4' canc er—fight'tng drug, without which breast cancer patients cannot smite. What is the consumer smphls in this market”? Demnd Supply Price Quantitj.r * Infinite x 2311} ............................. .. Price X Quantity Quantity 1eExerciseE I:J:I Exercise Score: 1. of 1. pt Assignment Score: 81.4% (16.28 0F 20 pts) ll) 0F 20 complete Price = $20 ‘ Price a." , , Supplywl Supplywlo Quamm‘ _ 50mm rides per da} medal ion req medal ion req 1}. TWhat are the price and quantityr with the medallion requ' ement'? 530 Price = $ 30 Quantitj,r = 73158 rides per dag.r 52” . . 510 c. Indicate the areas representing consumer surphls and producer surphls if there were no medallion requirement. Consumer surphls= A+Bi€ Producer smpl'us= D+E+F Demand 73,153 90,000 d. Indicate the areas represeruing consumer sm‘pl'us Quantity producer surplus, and deadweight loss with the medallion requ' ement. Y Consumer smphls= A leExerciseEE Exercise Score: 0.?5 0F 1. pt Assignment Score: 81.4% (16.28 of 20 pts] 20 of 2|} complete LU JU 1TH “ ‘ Pm 0" 220 a. How much revenue do kumquat producers receive when the market is in eqm'lihrimn? $ 1.5‘ billion 10. Suppose the federal government decides to impose a price floor of $20 per crate. Use the line drawing tool to draw a line to show d1e price floor. (Make sure lira! flre line crosses EIth lhe supply and demand lines.) Label this line 'PFIM'. Nefe: ifyau are no: prompfedfar Ellis label, you have used fire wrong drmrmg foal. E Now consumers will purchase 90 I'flfllitfll crates of D €13: UIIIIIIIII‘IIIIIIIIIIIII 0 :El 30 120 160 200 Quantity kumquats and kumquat producers will receive $ 1. billion in revenue. (Assume filial flre gavernmertf does nor purchase arr]; surplus lcumquafs.) 19Exercise3£ I:J:I Exercise Score: 1. 0F 1. pt Assignment Score: 81.4% (1.6.28 0F 20 p13] 20 of 2|} complete If the goal of the federal government's farm program is to raise the incomes of poor family farmers= is the current system of ' price floors and subsidy payments based on the number of acres fanned a good way to reach the goal? Yes V No d@@@@@@@@@@bm mmm Exercise Score: 0 OF 1 pt Assignment Score: 81.4% (1.6.28 0F 20 pts] 20 of 20 complete Suppose the competiliye eqmlibrium rent for a standard A price a; two-bedroom apartment in Lawrence is $600. Now - suppose the council passes a rent control law imposing a price ceiling of $500. Draw a demand and supply graph to illustrate the impact of the rent control law. Suppose that shortly after the law is passed= a large employer in the area announces that it will close a plant in Lawrence and lay off 5,000 workers. Show on your graph how this will affect the market for rental property in Lawrence. 1) Use the line drawing tool to complete the supply and demand graph for the market with the price ceiling to the right. (Make sure to draw fhe fine such firm if crosses .501th snppb' and demam lines). Label this line IP H gl- 2} Now use the line drawfilg tool to show the effect of the layoffs. Properly label this line. Quantity Nofe.‘ ifyon are nor prampredfiar line labels, you have used {he wrong drawing moi. I 19E1=<ercise Exercise Score: 0.?8 OF 1 pt Assignment Score: 81.4% (1.6.28 0F 20 pts] 20 of 20 complete ‘ Rent=$ soo, Quantity: Irsooo ‘ Price 0' Ln eqmlibriLmr, will there be any renters who are unable to find an apartment to rent or any landlords who are unable to find a renter for an apartment? I Yes * N0 11. Suppose the government sets a ceiling on rents of $300 per monm. What is the quantity of apartments demanded, and what is me quantity of aparlments Price Ceiling supplied? QuanIity demanded: 225000 Quantity supplied: 125000 I I | 100.000 150.000 200.000 250.000 e. Assume that all landlords abide by the law. Use the ULIBI‘INW demand and supply graph on the right and indicate (i) the area that represents consumer smplus. (ii) producer surplus, and (iii) deadweight loss after the price ceiling ' lEEKEfClSE3l {J} Exercise Score: 1. OF 1. pt Assignment Score: 81.4% (1.6.23 of 20 pts] 20 0F 20 complete [Related to the Chapter Opener] The political commentator George Wifl asked the following question in a column in Newmeek magazine: "Are rent controls compassionate, or do they create a shortage of rental units and a disincentive for landlords to spend on maintenance?” Source: George F. Will, "One Judge's Conservatism," Nmmk, Hawk 3, 2003. How would you answer Wifl's question? Rent controls are compassionate. meaning they create a shortage of rental units and a disincentive for landlords to spend on maintenance. Rent controls are compassionate, meaning they do not create a shortage of rental units and a disincenIive for landlords to spend on maintenance. '4' Rent controls a_e not compassionate, meaning they create a shortage of rental units and a disincentive for landlords to spend on maintenance. Rent controls a_e not compassionate, meaning they do not create a shortage of rental units and a disincentive for landlords to spend on maintenance. leExercis-BE Exercise Score: 1. of 1. pt Assignment Score: 81.4% (1.6.23 of 20 pts] 20 of 20 complete E Eqmlibrimn price=$2 , Quantity demanded = 30, a. Price [dollars pergallonj: Q: Quantity supplied: 30' 52 Now assume that the price ceil' 1g is imposed and there is 4 [m A S no black market in gasoline. Now what will be the price $ ' """ " 1 of gasoline, the quantity of gasoline demanded and the T quantitv of gasoline supplied? El : Price: $1, Quanfiw dwmdad: 35 1 2m} ...... .._ ......... .. C F Quantity supplied: 2U Now there is a shortage of gasoline. 1}. Assume that the price ceiling is imposed and there is no black market in gasoline. What areas on the graph represent consumer surplus, producer surplus and deadweight loss? Demand 20 so is Quantity [millions of gallons per month: Consumer surplus = Addie-C leEzt-arcisei (JD Exercise Score: 1. 0F 1 pt Assignment Score: 81.4% [16.28 of 20 pts] 20 of ED complete In the United States, Amazoncom, Barnesanle—oblecom, and many other retailers sell books, DVDs, and music CDs for less than the price marked on the package. Ln Japan, retailers are not allowed to discount prices in this way. What is true about the Japanese law? It hurts consumers and large retailers. It benefits small and inefficient retailers who would not be able to match the discounts large and efficient retailers would offer if file law aIlowed d1em to. ‘4' Both A and B are correct. Neither A nor B is correct. lEEHBI’Cl .3}:- Exercise Score: l. of 1 pt Assignment Score: 31.4% (15.23 of an ptsj ac- uf no complei Most familv businesses in the United States receive little direct support fi'om the federal government. However, famrlv farms have been receiving support from the federal government since the 19305. Whv do you suppose famflv farms have been singled out as meric'tng special support from the government? States with a lot of famle farms are disproportionatelv represented in the US. Senate. For many years the familv farm was considered the social and moral backbone of the comm-t V Both A and B are correct. Neither A nor B is correct. 1eE><ereise3 Exercise Score: 0.?5 0F 1. pt Assignment Score: 81.4% (1.6.23 0F 20 pts] 20 of 2|) complete E The competitive equrlibrimn rent in the city of Lowell is currently $1.000 per month. The government decides to enact rent control and to establish a price ceiling for apartments of $50 per month. [s rent control lilcely to make you personally better or worse off if you are: Someone currently renting an apartment in Lowell. 21. You will be better off . Someone who will be moving to Lowell next year and who intends to rent an apartment. ‘ b. You will be worse off . A landlord who intends to abide by the rent control law 1:. You will be worse off . A landlord who intends to ignore the law and illegally charge the highest rent you can for your apartments. :1. You will be better off . 1eExercise-4 Exercise Score: 1. 0F 1. pt Assignment Score: 81.4% l:l.5.28 0F 20 ptsj ll) of 20 complete children. Each knows that ifhe studies more in college A. M Costs and benefits from studying Cc- he'll get a betterjob and earn more. I‘om thinks about the ‘5 potential benefits to his children when he decides how 2“ much studying to do. Jacob doesn't. 22 2” ginal cost a. What type of arises Erom studying? 1 V Positive Negative 1C 15. to. Draw a graph that shows the Recall that 1i I'orn thinks about the potential benefits to his potential 1” children when he decides how much studying to do. Jacob doesn't. Assume that Jacob's costs and benefits from studying have a value of IS, when studying for 4 5 Social benefit hours, and Tom's costs and benefits fi'om studying have a ---=. emf— _ Private value of 10 when studying for 8 hours. He sure to label ' all of the lines. _ 02 5- 6 310121-1161520222126 Note: {f‘yon are noiprnmpieafor inbeis, you have Quantity of studying {hours} used the wrn rig drawing moi. E n leExercise‘ {JD Exercise Score: 1 OF 1 pt Assignment Score: 81.4% [16.28 of 20 pts] 20 {#20 complete E One of your friends states that your consumption of a Big Mac does not create an But suppose you arrive at your favorite McDonald's at lunchtime and get in a long line to be served. By the time you reach the counter, there are 10 people in line behind you. Because you decided to have a Big Mac for lunch—instead of, say. a pizza—each of those 10 people must wait in line an additional 2 minutes. Or suppose that after a lifetime of consuming Big Macs you develop heart disease. Because you are now over age :35. the govemment must pay most of your medical bifls through the Medicare system. Under these circumstances it can be said that you have created a negative in consmnption . GM@@@@@@@@@@D {J} Exercise Score: 1 DF 1 pt Assignment Score: 81.4% (16. Pollution Born a paper mill is an example of which of the following? Consumption generating a negative Consumption generating a positive V Production generating a negative Production generating a positive leExercise-4 {J} Exercise Score: 1 of 1 pt Assignment Score: 81.4% [16.28 0F 20 pts) 20 of 20 complete A cohtmnist for the Whit Street fonrmi observes the following. "No one collects money from those who benefit from the flood control a wetland provides, or the nuuient recycling a forest does. . .[n a nutshell, market failures help drive habitat loss" Source: Sharon Begley, "Furry Math? Market Has Failed to Capture True Value ofNature," Walt Whom, August 9‘, 2002, 1:, Bl. Which graph below shows the market for land to be used for development and illustrates how market failures cause habitat loss'? v 3*“ Supply Fri: essay“ 5 1 Fri: Efficia'lt 5 aquilibritm S .. aquilibritm 5 l 3 ............ .. Efficient ? a: I I I I I I I I I u F . . . . . . . . . . . .. bib-flint _ 2 . . . . . . . . . . . .. I :22 ...... .. Equilibrium P ........... Equilibrium I'L-Iarlcat : D; I'L-Iarkat D1 = = . : : . equilibrium; D equilibrium; 5 n. 5 5 Damm- : : Damm- oloq Qumtitr E22 Q1 Quanta.»- Eil'q. dam.»- age omit.»- leEaerciSEJI Exercise Score: 1. 0F 1. pt Assignment Score: 81.4% (16.28 of 20 pts) 2|} OF 20 complete Wriling in the New Yo rk Times, Michael Lewis argues the following: "Good new technologies are a bit like good new roads: Their social benefits far exceed what an}: one person or company can get paid for creating them" Source: Michael Lewis, "In defense of the Boom," Tori: Times, October 2?, 2002. Which of the following graphs best illustrates how gos-‘emment subsidies can bring about the efficient level of output of new technologies? V Eric Prie Erma.“ 5‘ Fri“ Supply Ff“ Efficient E'1 equilibrium 5 ] equilibrium _D 1 3 . . . . . . . . . . . . .. Eiieiait j. _ g I I I I I I I I I I. P‘ I I I I I I I I I I I u ‘ g - :2 ...... .. aquilibrimli D1 = : Dam“ . : : Q2 Q1 Elli-mm? QWQI Quantity Q1 Q2 Elli-mm? QIQ.‘I Quantity 1“ i w w w w fi,‘ 1.x w w -aa-o@@@®@®®®@®o mama; Exercise Score: 1 0F 1 pt Assignment Score: 81.4% [16.23 0F 20 pts] 20 of ID complete E According to an article in the Wall Siren? Journal, economist Paul Romer of Stanford has argued the following: "The market mechanism and property rights are excellent at conserving scarce resources and putting them to the most profitable use. . . .I'l'lE}" aren't so good at encouraging the production and dislribution of new ideas, which are critical to progress. " Source: David Wessel, "Precept: from Professor Summers," WELL Street Jenni-o1, October 13", 2002. The production and disnibution of new ideas have external benefits _ teExercise-J l:‘p.:l Exercise Score: 1. of 1. pt Assignment Score: 81.4% (1.6.28 of 20 pts] 2|) of 20 complete A recent stud}: of a large state where students were randomly assigned roommates found mat on average, males assigned to roommates who reported drinking alcohol in the year prior to entering college had one quarter—point lower GPAs than those assigned to nondrinking roommates. For males who themselves drank frequently prior to college, assignment to a roommate who drank frequently prior to college reduced GPAs b1: two-thirds of a point. Source: Michael Kremer and Dan M. Levy, “Peer Effects and Alcohol Use Among College Students," National Bureau ofEconomic Research 1Working Paper, 93m, Jul}: 2003. Which of the graphs belowr best shows the price of alcohol and the quantity of alcohol consumption on college campuses? Note that the deadweight loss that arises in this market is area A. V 31,: E5.— - 5 3i: ___ _ 3i: ___ _ gflc E5.— - 5.1 5.] Suppl? 51$ 13' 21 ............. .. F """""" " F . . . . . . . . . . . u?" ? _ _ _ _ _ _ _ _ _ _ __ : . Dammé Equilibrium; - _ . : : Q1 Q1 Quantitj; Q1112 Gram“? Q2111 lit-mm? Q1 (12 Quantity '1. ‘1. "\ '\ '1. ‘1. '\ '\ '1. ‘1. am@@@@@@@@@@ .mm Exercise Score: 1. OF 1. pt Assignment Score: 81.4% (1.6.28 0F 20 pts] 20 of 20 complete I Refer to the figure to the right. When an is H Price ‘k‘ present, which combination of price and quantity does the ‘0' _ private market yield? 82 = Socral cost 81 = Private P11 QC coat P . 8 Q1 Pu ........................ .. P , Q B 3 P1 ....................... V P11 Q1 Demand D .90 Q1 Quantity ...
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This note was uploaded on 03/30/2012 for the course ECON 201 taught by Professor Bonistis during the Spring '11 term at NJIT.

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hw 4 - 1eExercise I:}C:I Exercise Score: CI 0F 1. pt...

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