@ 7 67% AT&T 2:17 PM X HW 1.pdf TUI Australma, give a ist or wHO WIIIS TIOM uIS rCC radc agrecmient (and wiry uncy wir) J and who loses (and why they lose) II. Supply and Demand Changes (be sure to label the axis on all of your graphs) a) Suppose that you do a national survey of Americans, asking them how they feel about American-made cars versus Japanese-made cars. Suppose as well that you discover that Americans' "taste" for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold b) Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your 2 predictions for equilibrium price and sales change c) Suppose both (a and b above) of these shocks are would be your prediction for equilibrium price and sales change in the American car market? occurring simultaneously. Now what Suppose Congress approves a proposed "temporary worker" program and American firms nd out that they are able to hire workers while paying lower wages. This happens because workers become 'less scarce'. How would this economic shock impact the market for lettuce? d) e) Scientific reports have shown that iceberg lettuce (much of it grown in California) show high levels of contamination from rocket fuel. California farmers use the Colorado River for irrigation of their fields and the water of the Colorado River is contaminated from production on sites used by several defense contractors. How would this economic shock impact the market for lettuce? f) Suppose both shocks (d and e above) occur simultaneously. Now what would be your predictions for equilibrium price and sales change? g) There are four possible ways that demand and supply can simultaneously shift in a market These ways are listed below. For each case, draw two demand and supply graphs and show the demand change On each graph, indicate the direction of the change in P* and Q*. Finally, in each case, give your prediction for the overall net impact on P* and Q* for the market when both the demand and the supply change simultaneously Simultaneous Increase in Demand and Increase in Supply Simultaneous Decrease in Demand and Decrease in Supply Simultaneous Increase in Demand and Decrease in Supply Simultaneous Decrease in Demand and Increase in Supply on the second graph on the first graph and the supply change IV. Price Control Price Per Bushel Quantity Supplied Quantity Demanded (dollars) 3 36,000 0 2,000 6 30,000

@ 7 67% AT&T 2:17 PM X HW 1.pdf TUI Australma, give a ist or wHO WIIIS TIOM uIS rCC radc agrecmient (and wiry uncy wir) J and who loses (and why they lose) II. Supply and Demand Changes (be sure to label the axis on all of your graphs) a) Suppose that you do a national survey of Americans, asking them how they feel about American-made cars versus Japanese-made cars. Suppose as well that you discover that Americans' "taste" for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold b) Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your 2 predictions for equilibrium price and sales change c) Suppose both (a and b above) of these shocks are would be your prediction for equilibrium price and sales change in the American car market? occurring simultaneously. Now what Suppose Congress approves a proposed "temporary worker" program and American firms nd out that they are able to hire workers while paying lower wages. This happens because workers become 'less scarce'. How would this economic shock impact the market for lettuce? d) e) Scientific reports have shown that iceberg lettuce (much of it grown in California) show high levels of contamination from rocket fuel. California farmers use the Colorado River for irrigation of their fields and the water of the Colorado River is contaminated from production on sites used by several defense contractors. How would this economic shock impact the market for lettuce? f) Suppose both shocks (d and e above) occur simultaneously. Now what would be your predictions for equilibrium price and sales change? g) There are four possible ways that demand and supply can simultaneously shift in a market These ways are listed below. For each case, draw two demand and supply graphs and show the demand change On each graph, indicate the direction of the change in P* and Q. Finally, in each case, give your prediction for the overall net impact on P and Q* for the market when both the demand and the supply change simultaneously Simultaneous Increase in Demand and Increase in Supply Simultaneous Decrease in Demand and Decrease in Supply Simultaneous Increase in Demand and Decrease in Supply Simultaneous Decrease in Demand and Increase in Supply on the second graph on the first graph and the supply change IV. Price Control Price Per Bushel Quantity Supplied Quantity Demanded (dollars) 3 36,000 0 2,000 6 30,000

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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