Reference no: EM133198399 , Length: 3 Pages

Assignment:

For Question 3, you will want to draw graphs like those shown in the text. You do not have to submit your graphs, but you will need to describe your results. You may submit photos of your graphs to the Drop Box to support your answers, but they are not required. Detailed narrative answers to the questions are required. Be sure to explain whether equilibrium price increases or decreases and whether equilibrium quantity increases or decreases.

The videos below will refer to a specific assignment that was used in this course in the past. The information, however, will still be relevant in terms of the concepts of supply and demand. Please ignore any reference to specific questions or assignments.

Links to Extra Videos

Demand

Supply

Equilibrium

For the last question, be sure to show all of your math step-by-step. You will not receive full credit if you do not show how you arrived at your answers.

1. Explain the difference between a movement along a supply curve and a shift in the supply curve.

2. Suppose you decide to start your own business. Give a brief overview of the purpose and location of your new firm.

3. Refer to the company that you proposed in the previous question.

For each scenario below, use a supply and demand analysis to make a prediction regarding both the equilibrium price and quantity for your good or service. That is, for each part, tell me whether you expect the equilibrium price of your product to rise or fall AND whether you expect equilibrium quantity to rise or fall.

Also include in your explanation which curve is shifting and which shifter variable is affected.

a) Your customers' incomes increase. Be sure to note whether the good or service you are providing is a normal good or an inferior good.

b. The minimum wage is raised in your area, and you must pay your employees more. (Assume you have employees for this scenario, even if that was not part of your initial plan.)

c. A firm that offers the same good or service moves into town.

d. Your customers expect the price of your good or service to fall in the future.

e. The price of a good or service that can be substituted for yours falls (the substitute becomes cheaper).

f. The scenarios in both a) and b) occur at the same time.

4 Use the linear demand and supply curves shown below to answer the following questions. You must show all calculations step-by-step or no credit will be given.

a) The market or equilibrium price is $__________.

b) When 10,000 units are produced and consumed, total consumer surplus is $__________, and total producer surplus is $__________.

c) At the market price in part a, the net gain to consumers when 10,000 units are purchased is $__________.

d) At the market price in part a, the net gain to producers when they supply 10,000 units is $__________.

e) The net gain to society when 10,000 units are produced and consumed at the market price is $__________, which is called __________.

f) In market equilibrium, total consumer surplus is $__________, and the total producer surplus is $__________.

g) The net gain to society created by this market is $__________.