Chapter 3: Q 29. (page 78)
Does a price floor attempt to make a price higher or lower?
Price floor attempts to make a price higher.
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What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the
supply curve for milk.
Most government policy decisions have winners and losers. What are the effects of raising the minimum wage? It is more complex than simply producers lose and workers gain. Who are the winners and who are the losers, and what exactly do they win and lose? To what extent does the policy change achieve its goals?
Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following two changes.
a. Three new nightclubs are open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price.
b. The city eliminates a tax that is placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by 10%.
What is total surplus? How is it illustrated on a demand and supply diagram?
What causes a movement along the demand curve?
What causes a movement along the supply curve?
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