True or False Questions TF1. True or False. An improvement ni technology shifts the supply curve rightward. TF2. True or False. Consumer surplus wil always equal producer surplus when the market is in equilibrium. TF3. True or False. Social welfare is maximized when the market is in equilibrium. TF4. True or False. In equilibrium, consumer surplus wil equal producer surplus.

Multiple Choice Questions MC1. Many people argue against increasing the minimum wage because they believe the result would be increased unemployment. Which of the following best summarizes this argument? A higher minimum wage would a.increase the supply of labor while decreasing the demand for labor b.decrease the supply of labor while increasing the demand for labor c.increase the quantity supplied of labor while decreasing the quantity demanded of d.decrease the quantity supplied of labor while increasing the quantity demanded of labor e.increase the supply of labor while decreasing the quantity demanded of labor SA1. Describe the major characteristics of the market system.

SA2. What are the objectives that are attempted to be achieved by using price control?

SA3. Describe the difference between a market price and a market equilibrium price?

SA4. Describe the major differences between a public good and a private good.

The nake ofr amus go cays, ni are crable, says acording in pricion year,ni on. Using market equilibrium analysis, diagram the impact on market equilibrium price and market equilibrium quantity. Note that supply and demand may shift simultaneously. CG1. Lobster prices usually fal during the summer peak lobster harvest season, even though people like to eat lobster during the summer more than at any other time of year.

Teponakeoframuscoashays,ni aeilntablewaysacordnigitericion,ear,ni on. Using market equilibrium analysis, diagram the impact on market equilibrium price and market equilibrium quantity. Note that supply and demand may shift simultaneously. CG2. The price of a round-trip ticket to Paris on Air France falls by more than $200 after the end of school vacation in September. This happens despite the fact that generally worsening weather increases the cost of operating flights to Paris, and Air France therefore reduces the number of flights to Paris at any given price.

A survey indicated that chocolate is American's favorite ice-cream flavor. For each of the following, diagram the possible effects on market demand, market supply, or both as wel as market equilibrium price and quantity of chocolate ice cream. CG3. A severe drought ni the Midwest causes dairy farmers to reduce the number of milk producing cattle in their herds by a third. These dairy farmers supply cream that is used to produce chocolate ice cream.

A survey indicated that chocolate is American's favorite ice-cream flavor. For each of the following, diagram the possible effects on market demand, market supply, or both as wel as market equilibrium price and quantity of chocolate ice cream. CG4. Anew report by the American Medical Association reveals that chocolate does ni fact have significant health benefits.

A survey indicated that chocolate is American's favorite ice-cream flavor. For each of the following, diagram the possible effects on market demand, market supply, or both as wel as market equilibrium price and quantity of chocolate ice cream. CG5. New technology for mixing

CG6. Compute consumer surplus and producer surplus at $1.05 per pound of butter. CG7. Compute how much money the USDA will spend on buying up the surplus butter.

CG8. Taxes must be collected to pay for the purchases of surplus butter. As a result, social welfare is reduced by the amount the USDA spent on buying surplus butter. Compare the valueof social welfare without a price floor to social welfare with a price floor. CG9. Illustrate and describe the different economic consequences of a price floor and a price ceiling.

Price of butter (per pound) $1.20 1.15 S 1.10 1.05 E 1.00 Price . .. 0.95 floor 0.90 0.85 D 1.60 1.65 1.70 Quantity of butter (billions of pounds) The U.S. Department of Agriculture (USDA) administers the price floor for butter which the 2008 Farm Bill set at $1.05 per pound. At that price, according to data from the USDA the quantity of butter supplied in 2010 was 1.7 billion pounds and the quantity demanded was 1.6 billion pounds. CG6. In the absence of a price floor, compute the value of consumer surplus, producer surplus and social welfare