Liberty University ECON 213 Problem Set chapter 6 complete solutions correct answers updated

Liberty University ECON 213 Problem Set chapter 6 complete solutions correct answers updated

Suppose the market equilibrium wage is $11.00 an hour, and the minimum wage is currently $9.00 an hour.

(a) An increase in the minimum wage by $3.00 an hour to $12.00 an hour would result in     in the number of people looking for jobs.
(b) The quantity of labor demanded would    .
(c) Overall, this increase in the minimum wage would result in     in the labor market.

Suppose that the federal government places a binding price floor on coffee. To help support the price floor, the government purchases all coffee that consumers do not buy. If the price floor remains in place for a number of years, what do you expect to happen to each of the following?

Suppose the equilibrium price for soccer tickets in a free market results in 15,000 tickets being purchased. Major League Soccer has decided to impose a price control of $25 per ticket. At a price of $25, soccer teams would be willing to supply 22000  tickets. At this price, consumers are willing to purchase 18000 tickets. Which of the following is a result of the price control?

Suppose that the equilibrium wage for teachers in Wisconsin is $15/hour. Also suppose that Wisconsin raises its minimum wage to $12/hour. 

Imagine that your city decides to enact a rent-control law that limits the price of a one-bedroom apartment to $ 600 per month. Using the table below, answer the following questions.
 

Suppose the equilibrium price for soccer tickets in a free market results in 15,000 tickets being purchased. Major League Soccer has decided to impose a price control of $19 per ticket. At a price of $19, soccer teams would be willing to supply 11000  tickets. At this price, consumers are willing to purchase 25500 tickets. Which of the following is a result of the price control?

Suppose that the equilibrium wage for teachers in Wisconsin is $15/hour. Also suppose that Wisconsin raises its minimum wage to $14/hour. 

Please read the article below and use the information in the article to answer this question.

Let D₁ represent the demand curve for premium seats to the Broadway hit Hamilton, and let S₁represent the supply curve for these seats. If the producers of the show charge $497.50 for a premium seat, the scalpers will charge (a) , which is (b)   more than the price listed at the theater’s box office.  

If the theater starts to charge $796.25 for these seats, the theater will sell (a)    premium seats a week. Scalpers will charge (b)    , which is (c)     more than the price listed at the theater’s box office.

If the theater starts to charge $995 for premium seats, scalpers (a)

Choose one:

When the box office does sell premium tickets for $995, the box office will sell (b) premium tickets a week.

Currently, the theater charges $497.50 for premium seats, and at this price, there is a substantial amount of excess demand, as shown in the graph below. Scalpers buy these tickets and resell them for a much higher price. Seeing the huge profits that scalpers have made, the theater is considering doubling the price of premium tickets to $995.
Suppose that the demand curve and the supply curve for premium seats intersect at this new price of $995 so that there is no longer any excess demand. Some people will benefit from this change and others will not. Below is a list of groups of people mentioned in the article who are involved with the show in some way. Move the groups that benefit from the theater’s price increase to the box labeled “Better Off” and move the groups that are not made better off by the price increase to the box labeled “Not Made Better Off.”

Groups (5 items) (Drag and drop into the appropriate area below)

When the government imposes a binding price ceiling on loaves of bread, producers will want to supply (a)  bread and consumers will demand (b)   bread. Therefore, a binding price ceiling will lead to a (c)  of bread.

The price ceiling will have other effects as well. The size of a loaf of bread and the quality of bread would (d)  .  Although the consumers lucky enough to buy bread would pay a lower price, their opportunity cost of buying bread would (e)

The price ceiling would also cause other changes over time. In the long run, the demand for and supply of bread becomes (f)   elastic, leading to a (g)

Imagine that your city decides to enact a rent-control law that limits the price of a one-bedroom apartment to $ 700 per month. Using the table below, answer the following questions.​

Monthly rent

Quantity
demanded

Quantity
supplied

$600 

800

140

$650 

650

210

$700 

500

280

$750 

350

350

$800 

200

420

What is the market price without rent control?

How many one-bedroom apartments will be rented after the rent control law is passed?

The graph above shows the market for gasoline after the government imposes a price ceiling of $3.50 a gallon. With the price ceiling in place, the amount of gas that people would want in this market would be  gallons, but the gas station owners are willing to supply only  gallons.

Which of the following are likely to occur in this market?

The table below gives information on bottled water in Florida. As you would expect, the demand for water is higher than normal during a hurricane. 

Price
(per bottle)

Quantity supplied

Normal times
quantity demanded

Hurricane
quantity demanded

$6

100

25

75

$5

85

35

85

$4

70

45

95

$3

55

55

105

$2

40

65

115

$1

25

75

125

Concerned with citizen complaints of price gouging during past hurricanes, Florida's state government passes a law setting a price ceiling for a bottle of water equal to the market equilibrium price during normal times. After all, it seems unfair that sellers of water gain because of a hurricane.

During a hurricane, there would be a shortage of     bottles of water.

Without the antiprice gouging law, consumers would have to pay   $   more than the ceiling price, but they would be able to buy     more bottles of water.

The table below shows the demand and supply schedule for chocolate. Use the information to answer the questions that follow. 

Price
(per pound)

Quantity Supplied
(pounds)

Quantity Demanded
(pounds)

$7

80

30

$6

70

45

$5

60

60

$4

50

75

$3

40

90

$2

30

105

$1

20

120

The equilibrium price is $    per pound.

Suppose that after a successful lobbying campaign by chocolate producers, the government imposes a price floor of $7 per pound. The price floor will lead to a surplus of  pounds of chocolate.

After a few years, chocolate producers are not happy. They realize that compared to the market equilibrium, their total revenue has fallen by

To compensate the chocolate producers, the government agrees to buy the entire surplus chocolate at the $7 price floor. Chocolate producers rejoice. Compared to the market equilibrium, their total revenue has now increased by

The local city council passes a law that establishes a maximum rent for apartments in your city. Which of the following is likely to happen?

Suppose that the equilibrium wage for teachers in Indiana is $15/hour. Also suppose that Indiana raises its minimum wage to $10/hour. 
Because the equilibrium wage for teachers is (a)   the new minimum wage, we would expect the number of teachers employed to (b)  at the new minimum wage.  
(c) There will be  of teachers.

Use the graph below to answer the following questions.

How many low-skill laborers will be unemployed when the minimum wage is $8/hr?

How many low-skill laborers will be unemployed when the minimum wage is $6/hr?

Since 1996, market prices for helium have seen consistent increases based on high demand in the technology sector. Many households have felt the impact directly when purchasing helium for birthday balloons. 
The U.S. government controls roughly 75% of the world’s helium supply, and in 1996, it set a price floor for the helium market, which outlaws the sale of helium below $64 for 1,000 cubic feet. 
Suppose that the graph below illustrates the market for helium after the price floor was implemented.

(a) Because the price floor is set below the equilibrium price, the price control is 

(b) In the current market, a price floor of $64 would    the quantity of helium gas bought and sold.

(c) The quantity bought in the market is  cubic feet.

(d) The quantity sold in the market is  cubic feet.

The figure below illustrates the market for Washington apples after the government imposes a price floor of $20 per crate of apples.

Using the figure, answer the following questions.

How many crates of apples were sold before the price floor?

How many crates of apples will be demanded after a binding price floor is set? 

How many crates of apples will be supplied after a binding price floor is set? 

How many crates of apples will be sold after the price floor? 

Will there be a shortage or surplus?

What is the size of the shortage or surplus?

Suppose the equilibrium price for soccer tickets in a free market results in 15,000 tickets being purchased. Major League Soccer has decided to impose a price control of $18 per ticket. At a price of $18, soccer teams would be willing to supply 13000 tickets. At this price, consumers are willing to purchase 24500 tickets. Which of the following is a result of the price control?

The graph below shows a price floor (Pflr) that at first happens to lie exactly at the equilibrium price for hops, a plant whose buds give beer its characteristically bitter flavor. The floor ensures that hop farmers receive a guaranteed minimum price for their product; however, the floor is initially nonbinding.
At some point, changes in growing techniques lead to a change in supply. Drag the appropriate curve to illustrate what happens if the change causes the floor to become binding.

When a price floor becomes binding because of the change in the supply of hops, the net effect will be 

Using your knowledge of positive and normative statements from earlier chapters, identify each of the following statements relating to price ceilings and price floors as either positive statements or normative statements. Assume that all the price controls are binding.

A price floor in the form of a minimum wage is necessary to provide a living wage to people in the country.

A minimum wage increases the quantity demanded of labor in the workplace.

Governments should require lower minimum wages to increase economic growth.

A minimum wage won't encourage black markets to form.

Suppose that the federal government places a binding price floor on chocolate. To help support the price floor, the government purchases all chocolate that consumers do not buy. If the price floor remains in place for a number of years, what do you expect to happen to each of the following?

The quantity of chocolate demanded by consumers will 

The quantity of chocolate supplied by producers will

The quantity of chocolate purchased by the government will

Suppose the market equilibrium wage is $12.00 an hour, and the minimum wage is currently $10.00 an hour.

(a) An increase in the minimum wage by $3.00 an hour to $13.00 an hour would result in     in the number of people looking for jobs.

(b) The quantity of labor demanded would     .

(c) Overall, this increase in the minimum wage would result in     in the labor market.

Suppose that the equilibrium wage for teachers in Iowa is $15/hour. Also suppose that Iowa raises its minimum wage to $20/hour. 

Suppose the equilibrium price for soccer tickets in a free market results in 15,000 tickets being purchased. Major League Soccer has decided to impose a price control of $22 per ticket. At a price of $22, soccer teams would be willing to supply 25000  tickets. At this price, consumers are willing to purchase 17000 tickets. Which of the following is a result of the price control?

Suppose that the federal government places a binding price floor on running shoes. To help support the price floor, the government purchases all running shoes that consumers do not buy. If the price floor remains in place for a number of years, what do you expect to happen to each of the following?

Suppose the market equilibrium wage is $13.00 an hour, and the minimum wage is currently $11.00 an hour.

(a) An increase in the minimum wage by $3.00 an hour to $14.00 an hour would result in      in the number of people looking for jobs.

(b) The quantity of labor demanded would 
(c) Overall, this increase in the minimum wage would result in     in the labor market.