Chapter 4 Lab ECON 2101 Fall 2020 Group Number: Place YouTube video URL here: List group members who attended the lab meeting here: List group members who did not attend lab meeting here, if any: *** NOTE: DRAW A GRAPH WHENEVER NECESSARY TO RECEIVE FULL CREDIT AND BE SURE TO INCLUDE THE GRAPH IN YOUR ANSWER SUBMISSION. *** 1. If the price in a market is above the equilibrium price, does this create a surplus or a shortage? 2. When the price is above the equilibrium price, does greed (in other words, self-interest) tend to push the price down or up? 3. Jules wants to purchase a Royale with cheese from Vincent. Vincent is willing to offer this tasty burger for $3. The most Jules is willing to pay for the tasty burger is $8 (after all, his girlfriend is a vegetarian, so he doesn’t get many opportunities for tasty burgers). a. How large are the potential gains from trade if Jules and Vincent agree to make this trade? In other words, what is the sum of producer and consumer surplus if the trade happens? b. If the trade takes place at $4, how much producer surplus goes to Vincent? How much consumer surplus goes to Jules? c. If the trade takes place at $7, how much producer surplus goes to Vincent? How much consumer surplus goes to Jules? 4. a. When demand increases, what happens to price and quantity in equilibrium? b. When supply increases, what happens to price and quantity in equilibrium?
