Question

 1. The link between resource and product markets

 The following graph represents the labor market in the insurance industry in a hypothetical economy. Suppose the insurance board raises the qualification requirements for insurance brokers in this economy. As a result, many entry-level insurance brokers decide to switch to another industry.

 Assuming all other things are constant, show the effect of this tighter requirements on the labor market for the insurance industry by shifting one or both of the curves in the following graph.

 The following graph shows the initial demand for and supply of insurance services in this economy before the previously identified changes in the labor market.

 Show the effect of the tighter requirements on the insurance services market by shifting one or both of the curves.

 2. The language of price controls

 Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour.

 Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevall in the market.

 Statement

 Due to new regulations, fast food restaurants that would like to pay better wages in order 

 to hire more workers are prohibited from paying more than $16.50 per hour.

 The government has instituted a legal minimum price of $5 each for hamburgers.

 The government prohibits fast food restaurants from selling hamburgers for more than $8 each.

 3. Price controls in the Florida orange market

 The following graph shows the annual market for Florida oranges, which are sold in units of 90-pound boxes.

 Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

Answer 1