A recent study found that the demand and supply schedules for flying disks are as follows: Price Quantity Demanded Quantity Supplied (Dollars per disk) (Millions of disks) (Millions of disks) 11 1 15 10 Activity Frame 12 9 4 9 6 8 W 10 Complete the first row of the following table by indicating the equilibrium price and the equilibrium quantity of flying disks in the absence of any price controls. Market Price Market Quantity Scenario (Dollars per disk) (Millions of disks) Binding or Not Binding No Price Control N/A Price Floor Price Ceilingto the graph.) 10 Demand Supply - -|- Scratch points Activity Frame Price of Beer (Dollars per case) 0 | i | | i | i | i 0 1 2 3 4 5 6 7 8 9 10 Quantity of Beer (Thousands of cases) Complete the first row of the following table by entering the price paid by consumers, the price received by producers, and the quantity of beer so the absence of a tax on this market. Tax Price Paid by Consumers Price Received by Producers Quantity of Beer Sold (Dollars per case) (Dollars per case) (Dollars per case) (Thousands of cases) 0 4 Suppose the federal government requires beer drinkers to pay a $4 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.) Complete the second row of the above table by entering the price paid by consumers, the price received by producers, and the quantity of beer so when beer drinkers pay a $4 tax on each case of beer. True or False: The difference between the price paid by consumers and the price received by producers remains unchanged. True False 6. Problems and Applications Q6 Suppose the government places a $500 tax on luxury cars. If the demand curve for luxury cars were perfectly inelastic, the price paid by consumers will rise by Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on producers. Activity Frame In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve. 3.0 O 2.5 Supply Demand 2.0 Supply 1.5 Price of Gasoline (Dollars per gallon) 1.0 Demand 0 .5 0 2 3 5 6 Quantity of Gasoline (Thousands of gallons)True or False: The price consumers pay will be lower if the tax were imposed on producers. True False If the demand for gasoline were more elastic, this tax would be V effective in reducing the quantity of gasoline consumed. True or False: Consumers of gasoline are helped by this tax. True False Workers in the oil industry are V by this tax. Suppose the minimum wage is $8 per hour in the market for unskilled labor, as shown on the following graph. Use the grey point (star symbol) to indicate the market equilibrium wage and quantity of labor in the absence of a minimum wage. Then use the purple point (diamond symbol) to indicate the level of employment at the minimum wage provided, and use the orange point (square symbol) to indicate the quantity of labor supplied at this minimum wage. Finally, use the green polygon (triangle symbols) to show the total wage payments to unskilled workers. /_\\ K3} 8 I 10 _. UPPY 9 $1 Minimum Wa e 6 9 Market Equilibrium A v ? E f 6 Minimum Wage Outcome 8 . n _o 9. % 4 Labor Supplied at Minimum Wage {U E 3 2 Total Wage Payments 1 Demand 0 1llllllllli a 1 2 3 4 5 a 7 8 9 10 Quantity of Labor (Millions of workers) At the minimum wage of $8 per hour, the level of unemployment is million workers, and the total wage payments to workers are million. Now suppose the secretary of labor proposes an increase in the minimum wage. Indicate the effect this change in the minimum wage has on each of the following labor market components. Increase Decrease Employment Unemployment Complete the following table by indicating whether the elasticity of demand, the elasticity of supply, both, or neither affect the magnitude of the change in employment and unemployment. Elasticity of Demand Elasticity of Supply Employment Unemployment If the demand for unskilled labor were elastic, the proposed increase in the minimum wage would Y the total wage payments to unskilled workers. Graph Input Tool (7); Market for Tickets 100 -- Supply 90 _ Price 10 80 Quantity Quantity Supplied 70 -- Demanded 68 (Thousands of 38 3 ( Thousands of tickets) 3 60 tickets) 0 l: 50 . l .5 + .25 4o CT 30 __ Tax on Buyers 0'00 Den\" and 20 m - + + 0 l I I 0 3B 76 Quantity of Tickets (Thousands) Seeing a golden opportunity to raise revenue, the city of Boston levies a per ticket tax of $5 to be paid by the ticket buyer. Boston sports fans, a famously civic-minded lot, send in the $5 per ticket. True or False: The entire tax burden falls on the team's owners because supply is perfectly inelastic. True False A market is described by the following supply and demand curves: Q5 = 4P Q; = 400 P The equilibrium price is is and the equilibrium quantity is Suppose the government imposes a price ceiling of $90. This price ceiling is V , and the market price will be 8 . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $90 will result in V . Suppose the government imposes a price floor of $90. This price floor is V , and the market price will be $ . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $90 will result in V . Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is: QS = 4(P 10) With this tax, the market price will be is , the quantity supplied will be , and the quantity demanded will be . The passage of such tax will result in V