PRINCIPLES OF MACROECONOMICS ASSESSMENT - Supply and Demand, and Equilibrium Analysis
Assume: Demand Curve: QD = 80 - 10P; and Supply Curve: QS = 10P
1. Using the above information, complete the schedules for Quantity Demanded and Quantity Supplied associated with each Price.
2. Identify in the Schedule the Equilibrium Price and Equilibrium Quantity.
3. Using the information derived from the schedules, plot the Demand and Supply Curves.
4. Identify on the graph, the Equilibrium Price and Equilibrium Quantity
5. The government imposes a minimum price of $6.00, what are the implications of such governmental intervention.
a. What shall be the QD?
b. What shall be the QS?
c. Characterize the implications for the minimum price, Surplus or Shortage. Will there be a line for goods, Yes or No.
d. What is the amount of the Surplus or Shortage, as the case may be?
6. The government imposes a maximum price of $2.00, what are the implications of such governmental intervention.
a. What shall be the QD?
b. What shall be the QS?
c. Characterize the implications for the minimum price, Surplus or Shortage. Will there be a line for goods, Yes or No.
d. What is the amount of the Surplus or Shortage, as the case may be?
7. Given the information derived above, identify on the graph consumer surplus and producer surplus for each situation as well as deadweight loss, if any.
a. No Government Involvement in the Marketplace
Calculate the following:
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Total Surplus
b. Government imposes a minimum price of $6.00
Calculate and assess (describe the impact) of the following:
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Total Surplus
5. Government Revenue
6. Is the market operating efficiently: Yes or No. Why?
c. Government imposes a maximum price of $2.00
Calculate and assess (describe the impact) of the following:
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Total Surplus
5. Government Revenue
6. Is the market operating efficiently: Yes or No. Why?
d. Government imposes a sales tax of $4.00, which is equally split between consumers and producer.
Calculate and assess (describe the impact) of the following:
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Government Revenue
5. Total Surplus
6. Is the market operating efficiently: Yes or No. Why?
e. Now assume a World Price of $2.00.
Calculate and assess (describe the impact) of the following:
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Total Surplus
5. Quantify the Quantity of Goods Imported
f. Now assume a tariff of $1.00 is added to the World Price, above.
Calculate and assess (describe the impact) of the following
1. Consumer Surplus
2. Producer Surplus
3. Deadweight Loss
4. Tariff Revenue
5. Quantify the Reduction of Goods Imported
6. Total Surplus
7. Describe the implications of the imposition of a tariff in this market.
Note - All graphs are in attached file.
Attachment:- Assignment File.rar