Homework

1. (1 point) What do you think happens to the demand for heavy winter coats during the summer? Why?

2. (0.25 point) Discuss the law of demand in the context of buying pizzas, which are normally priced at $10, when the price rises above and dips below that normal price.

3. (1 point) In your own words, describe the difference between a change in demand and a change in quantity demanded.

4. (1 point) Describe surplusses:

• do they occur at prices higher or lower than equilibrium?
• When they occur, is quantity demanded higher or lower than quantity supplied?
• How does adjustment occur to eliminate a surplus?
  
  Then, answer the same questions for shortages.

5. (1 point) Why do economists use the ceteris paribus, or other-things-equal, assumption?

6. (1.25 points) Discuss the determinants of demand (listed below) for a specific good: peanut butter. For each of the shifters, give an explicit example of a change in an external factor that shifts demand for peanut butter, then indicate whether your particular example would increase (shift rightward) or decrease (shift leftward) the demand for peanut butter.

• Number of consumers or size of the population
• Consumer taste and preferences
• Consumer income
• Related product
• Changes in Expectations

7. (1 point) Refer to the following figure, which shows a demand and supply diagram for a particular good:

a. If the good is traded at point (1), is there deadweight loss?

b. If your answer to part a. was yes, list which triangles (a, b, c, d, e, and/or f) represent the deadweight loss graphically.

c. If the good is traded at point (2), is there deadweight loss?

d. If your answer to part c. was yes, list which triangles (a, b, c, d, e, and/or f) represent the deadweight loss graphically.

8. (1 point) Refer to the following figure, which shows a demand and supply diagram for a particular good:

a. If the good is traded at point (3), is there deadweight loss?

b. If your answer to part a. was yes, list which triangles (g, h, i, j, k, l, m, n, o, and/or p) represent the deadweight loss graphically.

c. If the good is traded at point (4), is there deadweight loss?

d. If your answer to part c. was yes, list which triangles (g, h, i, j, k, l, m, n, o, and/or p) represent the deadweight loss graphically.

9. (1 point) Explain why a living wage is considered to be a price floor. Does a living wage have the same outcome as imposing a minimum wage? 

10. (1 point) Provide an original example of a factor that can cause a shift in the labor market supply curve of economists. 

11. (0.5 points) What is price typically called in the labor market?