..Please help solve the following micro-economic questions..

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Question 1. (Show all calculations] Zack owns a vineyard just outside Wolfville, Nova Scotia that another wine grower wanted to rentfrom him in 2016 for $40,000. Zach was offered a seasonaljob what would have paid him $20,000 and he could have leased some ofhis machinery and equipment for $10,000. However, Zach decided to would grow and harvest the grape crop himself rather than renting out the vineyard. His revenue from the grapes totaled $225,000. His purchases of supplies and services cost him $140,000 and he paid $10,000 in wages to a hired worker. He partly financed the grape harvest with savings that otherwise would have earned him $2,000 in interest payments. 3. In 2016, what were Zach's explicit costs and accounting profit? [4 marks] Answer: Accounting profit = Total Revenue - Total Costs Explicit costs: A direct payment made to others in the course of running a business, such as wage, rent, and materials. Explicit costs = $140,000 (purchases of supplies] + $10,000(wages) = $150,000 Total revenue = $225,000 Accounting profit = $225,000 - $150,000 = $75,000 Therefore: Accounting profit = $75, 000 b. What were his implicit costs and economic profit? [4 marks] Answer: Economic profit= Total Revenue - implicit costs (opportunity costs) - explicit costs (monetary) Implicit costs = $40,000 (rent forgone} + $20,000 (job offer forgone) + $2,000 (interest given LLB) Implicit costs = $62,000 Economic profit = $225,000 - $150,000 - $62,000 = $13,000. Therefore: Economic profit = $13, 000 c. If his costs and revenue are, anticipated to be the same in 2017 as they were in 2016, would you expect Zach to operate the vineyard in 2017? Explain. [2 marks] Answer: Zach would certainly operate the vineyard in 2017 because with the same level of costs and revenues, his accounting profit and economic profit will remain the same, both showing positive results. His vineyard will operate profitably. Question 2.The market for blueberries in Nova Scotia is initially in equilibrium. Use a separate diagram in each situation. (Don't forget to label all relevant points, curves etc.) With the aid of appropriate diagrams: Clearly identify the areas representing consumer and producer surpluses. [2 marks] Answer: 5 = supply Curve; D = demand Curve; (1: Quantity; P = price Consumer surpluses are shown on the top portion of the diagram part a. Producer surpluses are shown on the bottom portion of the diagram part a. Given the health benefits of blueberries, the government introduces a binding price ceiling to enable low-income families to purchase the berries. On a new diagram, clearly identify any change in consumer or produce surplus and identify any resultant Dead Weight Loss from the introduction of the price ceiling. [4 marks] Answer: 5 = supply Curve; D = demand Curve; (1: Quantity; P = price; PX = price ceiling line H -u: - .- .: - :Jzu 0.. .I: 9- en -f'e=-' :u o "I 1' Producer surpluses are shown on the bottom of diagram b with dots Dead Weight loss is shown by circles in part b of the diagram. 2. The connection between macroeconomics and mlcroeconomlcs Aa Aa E Unemployment analysis is an excellent example of the ties betWeen macroeconomics and microeconomics. We measure unemployment at the macro level, but micro forces partly determine this macro aggregate. Suppose the following graph in the calculator represents the market for unskilled labor in France. Many of the young, inexperienced youths involved in the recent rioting would begin their working careers in this labor market. Use the calculator to answer the questions. Tool tip: Use your mouse to drag the green line on the graph. The values in the boxes on the right side of the calculator will change accordingly. You can also directly change the values in the boxes with the white background by clicking in the box and typing. When you click the Calculate button, the graph and any related values will change accordingly. WAGE Euros per hourl CALCULATOR 15 Wage I [Euros per hour] 7'5 12 Labor Demanded 500 Labor Supplied 500 [Thousands of workers] [Thousands of workers] 0 Surplus labor 0 9 [Thousands of workers] Laboremand Shifters _ 6 Payroll tax I [Percent of earnings] 1'0 ' 3 0 200 400 600 800 1000 QUANTITY IThousands of workers] W E Suppose the minimum wage in France is 10 euros per hour. Let's dene an unemployed worker as one that is willing to work at the prevailing wage. In this case, the minimum wage is binding because it lies above the market wage. That is, the minimum wage is the prevailing wage. If the wage is not allowed to fall below 10 euros per hour, unskilled workers are unemployed. The labor force is simply the number of employed workers plus the number of unemployed workers. At a minimum wage of 10 euros per hour, the size of the unskilled labor force is Recall the calculation for the unemployment rate: Unemployment Rate = (Unemployed ,f Labor Force). At a minimum wage of 10 euros per hour, the unemployment rate among unskilled workers is As indicated in the calculator, the initial payroll tax is 40%. A payroll tax is a tax on the earnings that an employer pays to an employee. The commentary suggests that France can reduce unemployment among young, inexperienced workers by cutting payroll taxes. Suppose France cuts the payroll tax from 40% to 30%. Assuming the 10 euro minimum wage remains in force, the unemployment rate among unskilled workers after the payroll tax cut is ECON 106 MICROECONOMICS REV. 05/17 UNIT I - VERSION M2 - DEPARTMENTAL SECTION 2 - PROBLEMS Choose TWO of the following three problems. Each problem is worth 10 points, Answer on the fest or on the worksheets/graph paper/extra paper provided. PROBLEM #1 Amount of Quantity Demanded Price Quantity Supplied Surplus/Shortage 290 $125 100 Shortage - /90 150 145 150 0 Equilibrium 110 165 200 70 185 250 30 205 300 Surpled + 270 A. Calculate the amount of surplus/shortage at each price in the above schedule. B. Draw the above demand and supply schedules on one graph, labeling axes, the two curves and the values for the equilibrium price and equilibrium quantity. C. Using the graph from Part B, illustrate what would happen to supply if there is a change in resource prices which lowers the cost of producing this good. Label it $2. D. Using the graph from Part B, illustrate what would happen to demand if consumer incomes increased and this is a superiorormal good. Label it D2. E. Using the graph from Part B, illustrate the effect of farm subsidies and label it as a price ceiling or a price floor. Would this government involvement cause a surplus or shortage in the market