Posted: December 20th, 2021

MBAA 523 set 2 questions

The popular and financial press regularly report on economic
events, but the description is usually quite different from the theoretical
model provided in a microeconomics textbook. This problem set provides an
opportunity to practice supply and demand ANALYSIS using excerpts from articles
published in the Wall Street Journal.For each of the following 12 economic circumstances, show
the shift of supply and/or demand curves; use an arrow to show the shift in the
curves, the change in price and the quantity demanded. To insert lines and
arrows in MS Word, click on “Insert” on the upper menu bar. Next, click the
drop down menu under “Shapes.” Select the shape you’d wish to insert, then use
the mouse to insert the line or arrow into the graph.Below the graphical ANALYSIS, write a short explanation
explaining your analysis. Here’s an example of the graphical analysis:This example shows an increase in the demand curve, perhaps
as a result of an increase in income. The shift in the demand curve leads to a
higher price and quantity demanded. For each problem, explain why the curve(s)
shifted.Problem 1 – Conflict fears drive up crude prices.A military conflict forces the shut-down of major crude oil
pipeline. World oil prices soared to an 18 month high. Show the effects in the
crude oil market.Explanation:Problem 2 – Egypt’s Gaza Crackdown Hammers EconomyAn aggressive crackdown by Egypt’s interim government on
smuggling tunnels between Egypt and the Gaza Strip is crushing the Palestinian
enclave’s economy, sparking concerns it could fuel a militant backlash. To get
around the blockade, Gazans smuggle goods, and the tunnels’ closure has sent
prices soaring in the past three weeks. Many Gazans now buy the Israel-shipped
fuel for seven shekels ($2) a liter — more than twice as much as that smuggled
from Egypt. The cost of cement, another major smuggled item, has reached $1,500
a ton from $1,000, said Ahmad Abdul-Rahman, a merchant. Show the effects in the
Gaza market for goods and services.Explanation:Problem 3 – Dutch Economy Faces StagnationThe Albert Cuyp market here, famous for its offerings of
CHEAP CLOTHING and exotic foods, is one of the busiest in the Netherlands. But
while it still attracts plenty of shoppers, customers are increasingly wary of
spending their money there, said Nicolas Steur, a 50-year-old fishmonger.
Revenue at his stall, where he sells fresh haddock, raw herring and other
seafood, has fallen by 20% compared with four years ago. “We still have
about the same amount of customers,” Mr. Steur said. “But they spend
less money. People are cutting down on their expenses.” Show the effects
in the Albert Cuyp market.Explanation:Problem 4 – Farmers Opt to Dump Supplies as Weather Forecast
Dashes Hopes for Price Jump.U.S. soybean supplies have been tight since last year’s
severe drought cut production. Many farmers held some of last year’s soybeans
in storage, waiting to see if they could sell them at a higher price this
summer, when supplies are tightest before the next harvest. This week, many of
those farmers decided it was time to sell. Weather conditions for this year’s
U.S. crop are mostly favorable, which means a large harvest this fall could
push prices lower. Historically high cash prices for soybeans early this week
also lured farmers to start selling. The result has been a collapse in cash
markets over the past two days. Show the effects of the changes in the last two
days.Explanation:Problem 5 – China lures the world’s pilots.The rising middle class in China means millions more people
are taking to the skies. There’s a tsunami of retirement which is now under way
in the airline industry. Chinese airlines have raised their pay offers to
foreign pilots by up to 30% in the past 18 months. Show the effects in the
global pilot labor market.Explanation:Problem 6 – Companies unplug from grid, delivering a jolt to
utilities.On a hill overlooking the Susquehanna River, two big wind
turbines crank out electricity for Kroger Co.’s Turkey Hill Dairy in rural
Lancaster County, Pa., allowing it to save 25% on its power bill for the past
two years. Show the effect on the public electric UTILITY COMPANY.Explanation:Problem 7 – Rising oil prices.Rising oil prices cause AIRLINES TO adjust flight schedules.
Show the effect on airline prices and quantity demanded.Explanation:Problem 8 – Federal Aviation Administration increases
minimum pilot qualifications.Regional airlines are concerned that higher flight hour
requirements for new pilots will increase costs. Show the effect on passenger
ticket prices and quantity demanded.Explanation:Problem 9: Europe levies new tax on airline tickets.A new tax on airline tickets has raised concerns the
European airline traffic will fall. Show the effect on airline ticket prices
and quantity demanded.Explanation:Problem 10 – More Doctors Steer Clear of MEDICAREFewer American doctors are treating patients enrolled in the
MEDICARE HEALTH program for seniors, reflecting frustration with its payment
rates and pushback against mounting rules, according to health experts — just
as millions of Americans are poised to gain access to such coverage under the
new health law next year. Some Americans may have difficulty finding doctors
who will take their new benefits or face long waits for appointments with those
who do. Some experts attribute the rise in defections to Medicare payment rates
that haven’t kept pace with inflation and the threat of more cuts to come.
Under a budgetary formula enacted by Congress in 1997, physicians could see
Medicare reimbursements slashed by 25% in 2014 unless Congress intervenes to
delay the cuts, which it has done several times. Show the effects on Medicare
patients. Hint: Note that some patients may have trouble finding doctors.Explanation:Problem 11 – Wage-Rise Report Sees Fewer Jobs, Less PovertyPresident Barack Obama’s quest to raise the federal minimum
wage to $10.10 an hour would eliminate about 500,000 jobs by 2016 but increase
pay for millions of Americans and lift nearly a million out of poverty, a
Congressional Budget Office report found. Analyze the labor market with a
minimum wage of $10.10 per hour.Explanation:Problem 12 – Rent ControlMany of the proponents of price ceilings argue that
government-mandated maximum prices, such as rent controls in New York City,
simply reduce producers’ profits and do not affect the quantity supplied of a
good on the market. If the relevant supply and demand curves are as pictured
below, show whether this belief is correct.Explanation:Problem 13 – Price ControlsRent controls limit the RENT TO Pc. Show the Lost Social
Welfare (known as Deadweight loss). You can do so by inserting the curve shape
which can be drawn around the deadweight loss.SDQPPcExplanation:Problem 14 – Supply and demandSuppose demand and supply are given by Qd = 50 – P and Qs =
1/2P – 10.A. What the equilibrium quantity and price in this market?B. Determine the quantity demanded, the quantity supplied,
and the magnitude of the surplus if the price floor is $42 is imposed on this
market.C. Determine the quantity demanded, the quantity supplied,
and the magnitude of the shortage if a price ceiling of $30 is imposed on this
market.Problem 15 – SupplySuppose the supply function for product X is given by Qsx =
-50 + 0.5Px – 5Pz.A. How much of product X is supplied when Px = $500 and Pz =
$30?
B. How much of product X is supplied when Px = $250 and Pz =
$10?

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