Part 1:
The Figure below illustrates the market for rental apartments in Clarksville. Use it to answer questions 1 through 5.
1. What are the equilibrium rent and equilibrium quantity of rental apartments?
2. If a rent ceiling is set at $500 a month, what is the quantity of apartments rented?
3. If a rent ceiling is set at $500 a month, what is the shortage of apartments?
4. If a rent ceiling is set at $500 a month, what is the maximum price that someone is willing to pay for the last apartment available?
5. If a rent ceiling is set at $700 a month, what is the quantity of apartments rented?
6. If a rent ceiling is set at $700 a month, what is the shortage of apartments?
The table below gives the demand and supply schedules of teenage labor. Use it to answer questions 7 through 10.
|
Wage rate
(dollars per hour)
|
Quantity demanded
|
Quantity supplied
|
|
(hours per month)
|
|
6
|
25,000
|
5,000
|
|
7
|
20,000
|
10,000
|
|
8
|
15,000
|
15,000
|
|
9
|
10,000
|
20,000
|
|
10
|
5,000
|
25,000
|
7. What are the equilibrium wage rate and number of hours worked?
8. What is the quantity of unemployment at the equilibrium wage?
9. If a minimum wage for teenagers is set at $9 an hour, how many hours do teenagers work and how many hours are unemployed?
10. If the demand for teenage labor increases by 10,000 hours a month, what is the wage rate paid to teenagers and how many hours of teenage labor are unemployed?
11. As the price elasticity of demand decreases (becomes more inelastic), the size of the price increase resulting from a tax (goes up or goes down?) and the share of the tax borne by consumers (goes up or goes down?).
Part 2:
South Korea to Resume US Beef Imports (Use this news clip to answer questions 1, 2 and 3)
South Korea will open its market to most U.S. beef. ... South Korea banned imports of U.S. beef in 2003 amid concerns over a case of mad cow disease in the United States. The ban closed what was then the third-largest market for U.S. beef exporters. ...
CNN, May 29, 2008
1. Which country, South Korea or the United States, has a comparative advantage in producing beef? What fact in the news clip did you use to answer this question?
2. Explain how South Korea's import ban on U.S. beef affected beef producers and consumers in South Korea. Specifically, what is the impact on consumer surplus and producer surplus in South Korea?
3. Assuming that South Korea is the only importer of U.S. beef, explain how South Korea's import ban on U.S. beef affected beef producers and consumers in the United States. Specifically, what is the impact on consumer surplus and producer surplus in the United States?
4. When the United States placed a tariff on steel imports in 2003, foreign producers naturally complained. But there were also complaints from some U.S. firms. Why would some U.S. firms strongly object to the tariff on steel imports into the U.S.?