Problem Set 3 A recent study found that the demand and supply schedules for Frisbees are as...

Question

Problem Set 3

A recent study found that the demand and supply schedules for Frisbees are as follows:

Frisbee manufacturers persuade the government that Frisbee production improves scientists understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $2 above the equilibrium price. What is the new market price? How many Frisbees are sold?

Irate college student march on Washington and demand a reduction in the price of Frisbees. An even more concerned congress votes to repeal the price floor and impose a price ceiling $1 below the former price floor. What is the new market price? How many Frisbees are sold?

A case study in Chapter 6 discusses the federal minimum-wage law. (This is posted in New Latte).
1. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply-and-demand diagram of the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers.
2. Now suppose the secretary of labor proposes an increase in the minimum wage. What effect would this increase based on employment? Does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticity’s, or neither?
3. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticity’s, or neither?
4. If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic?

Suppose the demand for coffee in a certain small town is a straight line. In particular, Q=800-100(P), where P is the price of a pound of coffee in $ and Q in the number of pounds demanded per week, the price of coffee is $4 per pound.
1. How many pounds of coffee do consumers in this town buy?
2. What is their consumer surplus from buying coffee? (I’m looking for a dollar figure here. It may help to draw the demand curve represented above, and it may help to remember that the area of a triangle is (1/2)(base)(height))
3. If the price of coffee falls to $3, how many pounds of coffee do consumers buy now?
4. What is their consumer surplus now?

There are four consumers willing to pay the following amounts for haircuts: Jerry: $7 Oprah: $2 Ellen: $8 Phil: $5. There are four haircutting businesses with the following costs: Firm A: $3 Firm B: $6 Firm C: $4 Firm D: $2. Each Firm has the capacity to produce only one haircut. For efficiency, how many haircuts should be given? Which Businesses should cut hair and which consumer’s should have their haircut? How large is the maximum possible total surplus.

Robert · Accepted Answer

Question 2 
Given, 
Area of hanger=250 sq.

Problem Set 3 A recent study found that the demand and supply schedules for Frisbees are as follows: Quantity demanded (millions) Quantity supplied (millions) What are the equilibrium price and...