ECON 2033, Microeconomics, Signature Assignment

SLO 1: Students will be able to demonstrate knowledge of the fundamental areas of business by applying business concepts and functions in an integrated manner.

SLO 2: Students will be able to identify business problems.

This assignment is worth a total of 100 points.

Review the grading rubric before completing this assignment

Points will be deducted for incorrect axis label(s) or axis not labeled at all; curves not labeled or not labeled correctly, incorrect economic terminology; incorrect economic theory; incorrect analysis of the question; incomplete answer.

Instructions: Write each question including its number and letter at the top of each of your answers, then draw the graph below the question itself. Under the graph, write paragraph or two explaining the economic principles behind any changes, movements, increases, decreases, etc. that you have shown on your graph and why these changes, movements, etc. are necessary as well as what steps are needed to get the market back to equilibrium.

All instructions must be followed to earn full credit. That is: all graphs must be properly labeled; graphs must use straight lines; colored curves/lines and directional arrows must be used to indicate any changes; paragraph(s) discussing the analysis and explanation of any changes must be grammatically correct (spelling, grammar, sentence structure, etc.); discussion and graphs must be economically sound; your name and the page number should be on the top right of every page; Times New Roman 12 pt. font is required for all text. Neatness counts! Carefully review the grading rubric. FOLLOW INSTRUCTIONS!

1.For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Show on your graph and explain whether there is a shift in the demand curve, the supply curve both curves, or neither.; what happens to price? what happens to equilibrium?

(a) An unexpected temporary heat wave hits the East Coast. Show the effect in the ice cream market in New England.

(b) The government introduces a tax on ice cream which is paid by producers. What is the effect in the ice cream market?

(c) China and Mexico are major producers of textiles. Workers in Mexico decide to go on strike. Show the effect on the market for Mexican textiles.

(d) Show the effect of the situation described in (c) on the market for Chinese textiles.

(e) Suppose the government imposes a price ceiling on bottled water. Show the effect in the bottled water market.

(f) Suppose the government imposed a price floor on bottled water. Show the effect in the bottled water market.

2. Imagine that you need to save $900 for your spring break trip to Puerto Rico. You can save $50 each week, and your grandparents have given you $200 as a birthday gift that you will use toward spring break savings. How many weeks do you need to save in order to reach your $900 goal? Show your work, graph your answer, and explain your results. (10 points)

3. If the demand and supply curves for computers are:

Q_D = 100 - 6P Q_S = 28 + 3P

What is the price of computers and the quantity of computers bought and sold at equilibrium? Show your work, graph your answer, and explain your results.

4. Read the following article from Barron's. Graphically analyze and explain your interpretation of the article. In other words, think like an economist in the explanation of your results. Sound economic theory and the use of correct economic terminology are mandatory to receive full credit. If you quote directly from any source, including the article below, you must use APA formatted in text citation.

Barron's A Supply-Side Solution for Health Care By H. Woody Brock

"America's biggest economic problem today is health care. Health care is consuming more than 18% of GDP and, if unchecked, that number could grow to 35% by midcentury. It could bankrupt the government and lead to economic collapse.

The Supreme Court has upheld most of the Patient Protection and Affordable Care Act -- otherwise known as Obamacare -- but the new law isn't the right solution. In spite of its laudable objectives, the administration's health-care initiative most likely will make the problem even worse.

Obamacare addresses only two of the three key elements of the health-care problem: It attempts to expand access to medical treatment by increasing coverage under private insurance and Medicaid; it attempts to control the costs of medical treatment, which have been growing at very high rates.

Each political party has a philosophical leaning toward one type of solution to the health-care-finance problem. We need to apply both of their solutions and also use a third method -- all at the same time.

While these two goals sound reasonable, they are in fact contradictory. Increasing insurance coverage will create a huge surge in demand for medical services as some 40 million previously uninsured Americans seek treatment, and several million people with pre-existing conditions become eligible for insurance. At the same time, implementation of the required cost-cutting measures by Obamacare will end up restricting the supply of a large number of treatments.

The combination of increased demand and restricted supply can only result in a new wave of rising prices or a rationing of available care -- or both. It's a fundamental law of economics."