Question

Number 6 please

tax a. What is b. What is 102 Part 1 Basic Concepts c. Find the value of producer surplus received by dive shops. (Hint: It may help to draw a sold beef c. How much graph.) vices increases, and that the new demand is given by Q-7,000-20P. Calculate the impact of this change in demand on the values you calcu- gain? d. What is the l e. The president d. Suppose that the demand for scuba diving ser- sociation make lated in parts (a) through (c). e. Are consumers better off or worse off as a result of the demand increase? How about producers? 6. Low-skilled workers operate in a competitive market. The labor supply is 10W (where offer to consum month forever ane to abandon the prn consumers pay th W is the price of labor measured by the hour- Why or why not? ly wage) and the demand for labor is Q 240- 20W. Q measures the (in thousands of hours). omeasures te quanity of labor hired8 Broccoli is a su wants people to eat more more broccoli if it didn't c a What is the equilibrium wage and quantity of low-skilled labor working in equilibrium? b If the government passes a minimum wage of $9 per hour, what will the new quantity of labor hired be? Will there be an excess demand or on broccoli, well below its $2 price. Will her plan, which ma affordable, help achieve her goak demand diagram to explain your excess supply of labor? How large? c. What is the deadweight loss of a $9 minimum 9. You know that price ceilings are soc they create deadweight losses. But th in other ways, too. Suppose the govern price ceiling of $1 per loaf on bread. En two ways in which this to be wasted beyond the deadweight loss d. How much better off does the $9 minimu surplus change), e How do your answers to (c) and (d) change if the and how much wonse off are regulation will c 10. Black markets are markets where items t rules and regulati a. Suppose that the government imposes loaf price ceiling on bread sales, well b free-market price. Explain how the exister black market for bread could potentially im per bushel price floor in the market for co Explain how the existence of a black m

Answer 1

(d) (6) Q^5 = 10 w implies supply Q^D = 240 - 20w implies demand (a) At Equilibrium Q^s = Q^D implies 10 w = 240 - 20 w implies w = 8 implies w = 8 therefore quantity of Labour supplied be Q = 10 w implies Q = 10 times 8 implies Q = 80 Hence equilibrium wage be 8 equilibrium labour be 80 If minimum wages be $9, there is excess supply Excess supply = Q^2 - Q^1 = 90 - 60 = 30 New Quality of labour hired be Q^D = 240 - 20 w implies Q^D = 240 - 20 times 9 implies Q^D = 60 (c) Dead weight loss = Area of a triangle ABC = 1/2 times Base times height = 1/2 times (9 - 6) times (80 - 60) = 1/2 times 3 times 20 DWL = 30 (d) Better of does the $9 minimum usages = Area of CDEF \r\n = Area of CDEF = CD times DE