eco

which the government has imposed a price floor of $12 per crate.

How many crates of apples will be sold after the price floor

has been imposed? million crates of apples

per year.   (Enter your response as an integer.)

Will there be a shortage or surplus? If there is a shortage or surplus, how large will it be?

There will be a (1) of

million crates of apples per year. (Enter your response as an integer.)

Will apple producers benefit from the price floor?

3. Suppose five construction companies have the ability to build a factory overseas to produce a manufactured good. The marginal cost of building a factory for each construction company is shown in the table below:

(1)

surplus

shortage

Producer	Marginal Cost
Company 1	$1,000,000
Company 2	$1,250,000
Company 3	$1,300,000
Company 4	$1,350,000
Company 5	$1,500,000

If the market price of an overseas factory is $1,480,000 , what is the surplus for these five companies?

Producer surplus is $ . (Enter your response as a whole number.)

6. In the recent few years, the demand for coffee has increased significantly. However, because of the effects of climate change, the pace of production of coffee has decreased. Using the supply and demand graph, explain how will this affect the price of coffee and the quantity of coffee in the market? [Make sure to draw the graph and lable every axes and lines.]

7.

Use the following production possibilities frontier for a

country to answer the following questions.

Which

point(s)

are

unattainable?

Briefly explain why. How

can we get to that

point?

Which

point(s)

are

efficient?

Briefly explain why.

Which

point(s)

are

inefficient?

Briefly explain why.

0

0

Consumption goods

Capital goods

Z

W

X

Y

V

P

P

F

8.

Which two arrows in the diagram depict the following

transaction:

Stanley purchases the

novel,

"Night of

Sorrows"

for his summer reading pleasure. Briefly explain why.

9. Suppose Dell is currently selling 3,000,000 computers per year. However, managers at Dell are considering whether to increase production by 300,000 computers. One manager explains that after increasing production by this amount, total profit would be $100 million. The last 300,000 computers will increase their revenue by $50,000 and their cost by $75,000. Given this information, should Dell increase production by 300,000 computers ? Why? Why not?