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Unformatted text preview: (10 points) Ethanol D Supply of ethanol decreases, price goes up and quantity goes down. P S S 1 Corn S D If crops are destroyed, supply will shift to the left and the surplus will decrease to Q-2 or will be completely eliminated depending on the magnitude of the shift. Price floor=$300 6 2 200 4 P S Q 300 Employment L S Minimum wage=$7.25 5.00 L* wage 7.25 L D Q S Q D 1 3. a. $6 b. $3 c. $2 d. $1 e. $8 f. $5 g. As a result of the tax, the level of market activity has fallen, from 60 units being bought and sold to only 50 units being bought and sold. (35 points, 5 points each) 4. (15 points) Quantity of Marshmallows D P 6 10 1 2 2...
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- Spring '08