1.a State the "Law of Demand" 5 pts Graph 3 Price D Graph 4 Price D b Look at these graphs: D 0, Quantity D 0,4-0, Quantity In graph 3 a higher price results in a higher quantity, in graph 4 a lower price results in a lower quantity. This means the "law of demand" is disproven. Do you agree? Why or why not? 5 pts 2. Let's say that the prevailing wage rate is $15. You(the Queen or King) are thinking of proposing a minimum wage of $20 or $10. a. Is the $20 proposal a price ceiling or floor? Is the $10 proposal a price ceiling or floor? 10 pts b. Who is the buyer and seller? (demand curve, supply curve)? 5pts c. What would be the result of both policies. i.e.would this result in a surplus or shortage, and what would you call this? 5 pts. 3 Two countries A & B have completely fixed and flexible prices respectively. Consider this data GDP A year 1 5200 units Prices A 26 GDP B Prices B 5200 units 26 year 2 there occurs a negative demand shock. A has a 30% decline in output. B has a 30% decline in prices. Compute Real GDP in A and B in year 1 and 2. 4 answers. 4pts ea Which county would experience a recession? Why? 4 pts