Reference no: EM13209526

Task 1: Explanation and Analysis

Identify changes in market conditions and their effect on equilibrium price and quantity for the following events: All events occur in the market for dental services. That is where the final good, dental services, are sold to consumers.

Event 1: The wages for all dental assistants increase, increasing the costs of inputs.
Answer the following questions:
A. Determine whether demand or supply changes, or both.
In the given event above, think about how dental assistants are related to dental services. Are they part of production or consumption? Once you have decided if they are part of production or consumption, state whether supply or demand has changed.
B. Determine whether the change is an increase or a decrease.
Before you answer, read the event again and see which determinant has changed. Then decide if that change results in an increase or a decrease.
C. Show the change in demand and/or supply on the graph of the initial equilibrium. (You will have one graph for each event.)
There is a graph showing the initial equilibrium in the Week 2 lesson. Once you have shown the initial equilibrium, in the same graph, you must show the change you decided upon in part A and B above.
Important: The grapher is required. It is not optional. You will earn no credit for using any other graphing utility.
D. Identify the result on the equilibrium price and quantity of dental services.
On the graph, show the two equilibrium points using the point plotting tool and a label. Do not forget to label each axis and each line.
Once you have shown that on your graph, you must state what happened to equilibrium price and quantity.
E. Insert the graph into a Word document. To paste the graphed image on a Word document, press and hold "ALT," then press "PrtScrn" while viewing the graphed image. Select a point on the Word document to paste the graph. Press and hold "Ctrl," then press "V."
You must submit your work on a Word document (.doc file extension) and do the print screen command as detailed above.

Event 2: The government provides national dental insurance benefits for all U.S. citizens that cover 100% of the cost of all dental services. There are two effects of this policy. First, there will be an increase in the number of consumers of dental services. Second, there will be fewer dentists willing to provide dental services, resulting in some dentists removing themselves from the market entirely.
Answer the following questions:
F. Determine whether demand or supply changes, or both.
Deal with each effect separately even though they are all part of the same event. In the given event above, think about how each of these effects will affect the market for dental services. Are they part of production or consumption? Once you have decided if they are part of production or consumption, state whether supply or demand has changed for each of the effects (the two highlighted sentences above).
G. Determine whether the change is an increase or a decrease.
Before you answer, read the event again and see which determinant has changed. Then decide if that change results in an increase or a decrease for each effect of the event. You have to answer separately for each effect (the two highlighted sentences above).
H. Show the change in demand and/or supply on the graph of the initial equilibrium. (You will have one graph for each event.)
There is a graph showing the initial equilibrium in the Week 2 lesson. Once you have shown the initial equilibrium, in the same graph, you must show the changes you decided upon in part A and B above. There are two changes because there are two effects.
Important: The grapher is required. It is not optional. You will earn no credit for using any other graphing utility.
I. Identify the result on the equilibrium price and quantity of dental services.
On the graph, show the two equilibrium points using the point plotting tool and a label. Do not forget to label each axis and each line. The two equilibrium points you are interested in is the first equilibrium and the last equilibrium after you have graphed the second effect.
Once you have shown that on your graph, you must state what happened to equilibrium price and quantity. Now remember, when demand and supply change, you will not be able to determine either the direction of price or quantity. You can unambiguously determine only one of the two. You need to explain this well because this is a critical part of this assessment.