Economics

For the Unit 2 Complete assignment, write a narrative essay (minimum of 1200 words) which addresses the questions and statements below.  When finished, the essay should demonstrate a thorough understanding of the READ and ATTEND sections.  A minimum of three scholarly sources are required, and all sources should be cited and referenced in APA format.  

1. Describe how each of the following will affect the demand for personal computers: a. A rise in income (assuming that computers are a normal good) b. A lower expected price for computers c. Cheaper software d. Computers that are simpler to operate  

2. Describe how each of the following will affect the supply of personal computers: a. A rise in wage rates b. An increase in the number of sellers of computers c. A tax placed on the production of computers d. A subsidy for the production of computers  

3. Refer to graph below to answer the following questions  a. Identify the areas that represent consumers’ surplus at the equilibrium price of PE. b. Identify the areas that represent consumers’ surplus if there is a price ceiling of Pc.

c. Identify the areas that represent deadweight loss due to a price ceiling set at Pc.

 

4. For each of the letters below, indicate if demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unitary elastic:

a. Price rises by 10 percent, and quantity demanded falls by 2 percent.

b. Price falls by 5 percent, and quantity demanded rises by 4 percent.

c. Price falls by 6 percent, and quantity demanded does not change.

d. Price rises by 2 percent, and quantity demanded falls by 1 percent.

  5.  Suppose the current price of gasoline at the pump is $4 per gallon and that 1 million gallons are sold per day. A politician proposes to add a $1 tax          to the price of a gallon of gasoline. She says that the tax will generate $1 million in tax revenues per day. Explain the assumption that she              is making.