Description
Homework 3
Due: February 10, 2022, by 11:59 pm
Book problems are from Chapter 4.
1. Use the graph below to answer the following questions.
S2
P
S1
20
A
14
B
C
10
E
8
D
G
F
D1
2
25
30
Q
a. What areas represents the consumer surplus and producer surplus with a supply of S2?
b. What areas represent the consumer surplus and producer surplus with a supply of S1?
c. What areas represent the change in economic surplus?
2.
a. Calculate the numerical values for consumer surplus and producer surplus for parts a from question 1.
b. Calculate the numerical values for consumer surplus and producer surplus for parts a from question 1.
c. Calculate the economic surplus for parts a and b from question 1.
d. Calculate the change in economic surplus using your calculations from part c.
3. Problem 15, Page 106
4. Problem 16, Page 106
Homework 4
Due: February 10, 2022, by 11:59 pm
Book problems are from Chapter 5.
Note: Do not use the midpoint formula when calculating elasticities.
Use the demand curves for whatchamacallits on the following graph to answer questions 1, 2, and 3.
P
B
A
10
D
C
8
E
4
2
6
10
14
Q
1. Calculate the following price elasticities of demand for whatchamacallits. For each part, evaluate
whether it is elastic, inelastic or unit elastic.
a. Point A to D
b. Point D to A
c. Point C to E
d. Point E to C
2. Suppose that consumers? average income increases from 50,000 to 60,000.
a. Use income elasticity of demand to verify that whatchamacallits are inferior goods if the quantity
demanded decreases from 10 to 2.
b. If instead the quantity demanded for whatchamacallits changes from 6 to 14, are whatchamacallits a
luxury or a necessity? Use income elasticity of demand to determine your answer.
3. a. Suppose the price of thingamajigs increases. If the cross-price elasticity between thingamajigs and
whatchamacallits is -2.3, would the change in market demand be more likely to occur from point A to
point B OR from point B to point A. Explain your answer. (Hint: you do not have to calculate anything;
this part is entirely conceptual).
b. Suppose the price of doohickeys decreases from 15 to 10. If the market demand for whatchamacallits
changes from point B to point A, how are these goods related? Find the cross-price elasticity to answer.
4. Use the graph below to answer the following questions.
Stax
P
Smarket
A
Pcon
B
E
C
F
D
G
Prec
H
Dmarket
Q2
Q1
Q
a. Which areas in the graph represent the deadweight loss (excess burden) of the tax?
b. Which areas represent the revenues collected by the government from the tax?
c. Which areas represent the consumer surplus and producer surplus after the tax is implemented?
5. Question 16 (Page 136)
Due: February 10, 2022, by 11:59 pm
Book problems are from Chapter 4.
1. Use the graph below to answer the following questions.
S2
P
20
Si
A
14
B
C
D
10
.
E
G
8
F
Di
2
25
30
a. What areas represents the consumer surplus and producer surplus with a supply of Sz?
b. What areas represent the consumer surplus and producer surplus with a supply of Si?
c. What areas represent the change in economic surplus?
0.5*10*30= 150
Producer Surplus for b
0.5*30*8
=120
c. Calculate the economic surplus for parts a and b from question 1.
Economic Surplus For a
75+75= 150
Economic Surplus For b
150+120
=270
d. Calculate the change in economic surplus using your calculations from part c.
3. Problem 15, Page 106
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