The popular and financial press regularly report on economic
\nevents, but the description is usually quite different from the theoretical
\nmodel provided in a microeconomics textbook. This problem set provides an
\nopportunity to practice supply and demand ANALYSIS using excerpts from articles
\npublished in the Wall Street Journal.For each of the following 12 economic circumstances, show
\nthe shift of supply and\/or demand curves; use an arrow to show the shift in the
\ncurves, the change in price and the quantity demanded. To insert lines and
\narrows in MS Word, click on \u00e2\u0080\u009cInsert\u00e2\u0080\u009d on the upper menu bar. Next, click the
\ndrop down menu under \u00e2\u0080\u009cShapes.\u00e2\u0080\u009d Select the shape you\u00e2\u0080\u0099d wish to insert, then use
\nthe mouse to insert the line or arrow into the graph.Below the graphical ANALYSIS, write a short explanation
\nexplaining your analysis. Here\u00e2\u0080\u0099s an example of the graphical analysis:This example shows an increase in the demand curve, perhaps
\nas a result of an increase in income. The shift in the demand curve leads to a
\nhigher price and quantity demanded. For each problem, explain why the curve(s)
\nshifted.Problem 1 – Conflict fears drive up crude prices.A military conflict forces the shut-down of major crude oil
\npipeline. World oil prices soared to an 18 month high. Show the effects in the
\ncrude oil market.Explanation:Problem 2 \u00e2\u0080\u0093 Egypt’s Gaza Crackdown Hammers EconomyAn aggressive crackdown by Egypt’s interim government on
\nsmuggling tunnels between Egypt and the Gaza Strip is crushing the Palestinian
\nenclave’s economy, sparking concerns it could fuel a militant backlash. To get
\naround the blockade, Gazans smuggle goods, and the tunnels’ closure has sent
\nprices soaring in the past three weeks. Many Gazans now buy the Israel-shipped
\nfuel for seven shekels ($2) a liter — more than twice as much as that smuggled
\nfrom Egypt. The cost of cement, another major smuggled item, has reached $1,500
\na ton from $1,000, said Ahmad Abdul-Rahman, a merchant. Show the effects in the
\nGaza market for goods and services.Explanation:Problem 3 \u00e2\u0080\u0093 Dutch Economy Faces StagnationThe Albert Cuyp market here, famous for its offerings of
\nCHEAP CLOTHING and exotic foods, is one of the busiest in the Netherlands. But
\nwhile it still attracts plenty of shoppers, customers are increasingly wary of
\nspending their money there, said Nicolas Steur, a 50-year-old fishmonger.
\nRevenue at his stall, where he sells fresh haddock, raw herring and other
\nseafood, has fallen by 20% compared with four years ago. “We still have
\nabout the same amount of customers,” Mr. Steur said. “But they spend
\nless money. People are cutting down on their expenses.” Show the effects
\nin the Albert Cuyp market.Explanation:Problem 4 – Farmers Opt to Dump Supplies as Weather Forecast
\nDashes Hopes for Price Jump.U.S. soybean supplies have been tight since last year’s
\nsevere drought cut production. Many farmers held some of last year’s soybeans
\nin storage, waiting to see if they could sell them at a higher price this
\nsummer, when supplies are tightest before the next harvest. This week, many of
\nthose farmers decided it was time to sell. Weather conditions for this year’s
\nU.S. crop are mostly favorable, which means a large harvest this fall could
\npush prices lower. Historically high cash prices for soybeans early this week
\nalso lured farmers to start selling. The result has been a collapse in cash
\nmarkets over the past two days. Show the effects of the changes in the last two
\ndays.Explanation:Problem 5 – China lures the world\u00e2\u0080\u0099s pilots.The rising middle class in China means millions more people
\nare taking to the skies. There\u00e2\u0080\u0099s a tsunami of retirement which is now under way
\nin the airline industry. Chinese airlines have raised their pay offers to
\nforeign pilots by up to 30% in the past 18 months. Show the effects in the
\nglobal pilot labor market.Explanation:Problem 6 – Companies unplug from grid, delivering a jolt to
\nutilities.On a hill overlooking the Susquehanna River, two big wind
\nturbines crank out electricity for Kroger Co.\u00e2\u0080\u0099s Turkey Hill Dairy in rural
\nLancaster County, Pa., allowing it to save 25% on its power bill for the past
\ntwo years. Show the effect on the public electric UTILITY COMPANY.Explanation:Problem 7 \u00e2\u0080\u0093 Rising oil prices.Rising oil prices cause AIRLINES TO adjust flight schedules.
\nShow the effect on airline prices and quantity demanded.Explanation:Problem 8 \u00e2\u0080\u0093 Federal Aviation Administration increases
\nminimum pilot qualifications.Regional airlines are concerned that higher flight hour
\nrequirements for new pilots will increase costs. Show the effect on passenger
\nticket prices and quantity demanded.Explanation:Problem 9: Europe levies new tax on airline tickets.A new tax on airline tickets has raised concerns the
\nEuropean airline traffic will fall. Show the effect on airline ticket prices
\nand quantity demanded.Explanation:Problem 10 – More Doctors Steer Clear of MEDICAREFewer American doctors are treating patients enrolled in the
\nMEDICARE HEALTH program for seniors, reflecting frustration with its payment
\nrates and pushback against mounting rules, according to health experts — just
\nas millions of Americans are poised to gain access to such coverage under the
\nnew health law next year. Some Americans may have difficulty finding doctors
\nwho will take their new benefits or face long waits for appointments with those
\nwho do. Some experts attribute the rise in defections to Medicare payment rates
\nthat haven’t kept pace with inflation and the threat of more cuts to come.
\nUnder a budgetary formula enacted by Congress in 1997, physicians could see
\nMedicare reimbursements slashed by 25% in 2014 unless Congress intervenes to
\ndelay the cuts, which it has done several times. Show the effects on Medicare
\npatients. Hint: Note that some patients may have trouble finding doctors.Explanation:Problem 11 \u00e2\u0080\u0093 Wage-Rise Report Sees Fewer Jobs, Less PovertyPresident Barack Obama’s quest to raise the federal minimum
\nwage to $10.10 an hour would eliminate about 500,000 jobs by 2016 but increase
\npay for millions of Americans and lift nearly a million out of poverty, a
\nCongressional Budget Office report found. Analyze the labor market with a
\nminimum wage of $10.10 per hour.Explanation:Problem 12 \u00e2\u0080\u0093 Rent ControlMany of the proponents of price ceilings argue that
\ngovernment-mandated maximum prices, such as rent controls in New York City,
\nsimply reduce producers\u00e2\u0080\u0099 profits and do not affect the quantity supplied of a
\ngood on the market. If the relevant supply and demand curves are as pictured
\nbelow, show whether this belief is correct.Explanation:Problem 13 – Price ControlsRent controls limit the RENT TO Pc. Show the Lost Social
\nWelfare (known as Deadweight loss). You can do so by inserting the curve shape
\nwhich can be drawn around the deadweight loss.SDQPPcExplanation:Problem 14 \u00e2\u0080\u0093 Supply and demandSuppose demand and supply are given by Qd = 50 \u00e2\u0080\u0093 P and Qs =
\n1\/2P \u00e2\u0080\u0093 10.A. What the equilibrium quantity and price in this market?B. Determine the quantity demanded, the quantity supplied,
\nand the magnitude of the surplus if the price floor is $42 is imposed on this
\nmarket.C. Determine the quantity demanded, the quantity supplied,
\nand the magnitude of the shortage if a price ceiling of $30 is imposed on this
\nmarket.Problem 15 \u00e2\u0080\u0093 SupplySuppose the supply function for product X is given by Qsx =
\n-50 + 0.5Px \u00e2\u0080\u0093 5Pz.A. How much of product X is supplied when Px = $500 and Pz =
\n$30?
\nB. How much of product X is supplied when Px = $250 and Pz =
\n$10?<\/p>\n","protected":false},"excerpt":{"rendered":"
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