Econ Practice ProblemsSet 2 1. Given the supply and demand equations below, find the equilibrium price and quantity. Qd = 14 - 2P Qs = 2 + 4P 2. Refer to the graph above. Suppose the government set a price control at $8 with the intent to help buyers. Would this be a price ceiling or a price floor? Would this price control cause a shortage or a surplus? How much would the shortage/surplus be? Year Price of 1 Jar of Peanut Butter Price of 1 Loaf of Bread 2017 $1.50 $1.00 2018 $2.00 $1.00 2019 $3.00 $1.50 3. Refer to the table above to calculate the following. The fixed basket contains 4 jars of peanut butter and 5 loaves of bread. The base year is 2017. a) Cost of the basket in each year b) CPI for each year c) Inflation rate for 2018(from 2017) and for 2019 (from 2018) 4. In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 251.7 for 2019. President Hoover's 1931 salary was equivalent to a 2019 salary of about_________________. Employed 5 million Unemployed 0.5 million Civilian Noninst. Population 7.5 million 5. Refer to the table above to calculate the following. a) Labor Force b) Not in the Labor Force c) Labor Force Participation Rate d) Unemployment Rate 6. Suppose an economy has an unemployment rate of 7%. If the economy's natural rate of unemployment is 5.5%, the cyclical unemployment rate must be _____%.

Answers: 1. Equilibrium price = $2; Equilibrium quantity = 10 units 2. Price ceiling; shortage; 20 units 3. a) $11 for 2017; $13 for 2018; $19.50 for 2019 b) 100 for 2017; 118.18 for 2018; 177.27 for 2019 c) 18.18% for 2018; 50% for 2019 4. $1,241,940.79 5. a) 5.5 million b) 2 million c) 73.33% d) 9.09% 6. 1.5%