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Line 1: − + − + − − − + − When the supply of a good increases, the price decreases. The demand is the same, but the supply curve meets the demand curve at a lower price. When the demand increases, the price will go up, because the quantity is the same, but more people want it. For example, ice cream. The demand for ice cream has risen, even in this economy, and the ice cream companies have seen that they can charge more for their product. But there are so many ice cream companies supplying this good that the price is kept low by constant competition. The free market at work is a marvelous thing.+ − 4. Why do grocery stores lower the price of their fruit (such as grapes) when they have an oversupply of ripened fruit? Explain by citing the downward slope of a demand curve, and describe what happens to this fruit after the grocery store lowers its price. + + − A lowered price creates a higher demand. More people are willing to pay $0.99 a pound for grapes than are willing to pay $1.50 a pound. So more people begin buying the grapes, which causes the supply to go down, thereby solving the grocery stores problem of an oversupply of fruit. + − 5. When the New York Yankees built their new $1.5 billion ballpark, they made a decision about how many "obstructed view" bleacher seats to include. Due to the design of this new stadium, people sitting in these bleacher seats could not see all of the field because part of the stadium structure blocks part of their view. Here is what the supply and demand are for those obstructed-view seats: + − Quantity of "Obstructed-View" Tickets Demand Price/Ticket Supply Price/Ticket − 300 $10 $3 − 600 $5 $5 − 900 $3 $7 − 1000 $2 $9 − (A) How many "obstructed view" bleacher seats did the New York Yankees build, based on the above data, and how much does the team make from sales of these tickets at each game? + − According to the chart, they built 600 “obstructed view” bleacher seats, which means they make 3000 a game. + − (B) Suppose the City of New York passed a law for a maximum price (a "price control") of $2 per "obstructed view" bleacher ticket. Will the obstructed-view seats sell out under this law, and will people have to wait in line in order to buy them? Would you oppose or support such a law, and why? + − − Absolutely oppose. For two reasons. One, I don’t like the government getting overly involved in the economy. Two, it would keep the prices unnaturally low, so the seats would always be in demand. But the quantity would not grow to meet the rising demand, creating a shortage. − − 6. "Time is money." Explain. Or, as an alternative, improve on our definition of a "free market." Or, as a third alternative, explain how the free market is so much powerful than even the wealthiest people in the world. − − Money is a measure of worth. Your time has value, both in use, and in exchange. Why? Because while you are, lets say, stuck in traffic on the way to a class, you could have been finishing homework, which have freed up time to do more work, or given you time to use at a job. So that time had value in use for things you could have been doing. Time is needed to do anything that makes money. − − 7. Explain why waiting lists develop in countries (like Canada and England) where the government prohibits anyone from charging more than fixed prices for medical services, assuming that these fixed prices are lower than what the prices would be under supply and demand in the free market. (Hint: the reason is related to the effect of price controls on the supply of a good or service.) − − In those countries, the government has set the price for various health care services artificially low so that they can afford to pay for it. Which makes it look very bleak to be a doctor in those countries, especially with the cost of medical school, thereby creating a shortage of doctors. So the price went down, but the demand stayed the same, causing the quantity to go down as well. Which obviously creates a shortage. Hence, waiting lists in countries with government controlled health care. − − Honors − 10. Discuss any aspect of the economics of health care.+ + + +
Economics Homework Two Answers - Student Twenty-One (view source)
Revision as of 14:56, September 17, 2009
, 14:56, September 17, 2009no edit summary
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1. The supply of a good, and the demand for that good, determine both the price and quantity at which the good is sold (assuming it is a free market).
1. The supply of a good, and the demand for that good, determine both the price and quantity at which the good is sold (assuming it is a free market).
2. Suppose the price demand curve for a particular good is P = $30 - Q, where P is the price and Q is the quantity. Also suppose the price supply curve is P = $6 + Q. At which price and quantity will the good be sold (assuming a free market)?
2. Quantity = 12
Quantity = 12
Price = $18
Price = $18
3. When the supply of a good or service increases, such as increasing the number of oil wells, what happens to the market price of oil? Explain. When the demand for a good a good or service increases, such more people driving cars that need gasoline (refined oil), what happens to the market price of oil? Explain.
3. When the supply of a good increases, the price decreases. The demand is the same, but the supply curve meets the demand curve at a lower price. When the demand increases, the price will go up, because the quantity is the same, but more people want it. For example, ice cream. The demand for ice cream has risen, even in this economy, and the ice cream companies have seen that they can charge more for their product. But there are so many ice cream companies supplying this good that the price is kept low by constant competition. The free market at work is a marvelous thing.
4. A lowered price creates a higher demand. More people are willing to pay $0.99 a pound for grapes than are willing to pay $1.50 a pound. So more people begin buying the grapes, which causes the supply to go down, thereby solving the grocery stores problem of an oversupply of fruit.
5.
(A) According to the chart, they built 600 “obstructed view” bleacher seats, which means they make 3000 a game.
(B) Absolutely oppose. For two reasons. One, I don’t like the government getting overly involved in the economy. Two, it would keep the prices unnaturally low, so the seats would always be in demand. But the quantity would not grow to meet the rising demand, creating a shortage.
6. Money is a measure of worth. Your time has value, both in use, and in exchange. Why? Because while you are, lets say, stuck in traffic on the way to a class, you could have been finishing homework, which have freed up time to do more work, or given you time to use at a job. So that time had value in use for things you could have been doing. Time is needed to do anything that makes money.
7. In those countries, the government has set the price for various health care services artificially low so that they can afford to pay for it. Which makes it look very bleak to be a doctor in those countries, especially with the cost of medical school, thereby creating a shortage of doctors. So the price went down, but the demand stayed the same, causing the quantity to go down as well. Which obviously creates a shortage. Hence, waiting lists in countries with government controlled health care.
Honors
10. Discuss any aspect of the economics of health care.
Health care is a very important issue in politics today. Is it because politicians actually care about the health of their constituents, or because health care represents such a large part of the economy and they want more power in that area? Or because of all the things they can slip into the bill, like abortion funding, services for illegal immigrants, and various other issues. These all would create a larger demand, without doing anything for the supply.
Liberals would have you believe that the system is totally broken and the only solution is government control. Well, it’s obviously not working in other countries, so that’s probably not the right answer.
Some people cannot afford to pay for insurance or health care. Sounds like it should be a simple fix, right? Well, who should be fixing it? Not the government, for sure. Their solution would maybe not start with total control, but it would very likely end there. Each and every American has the right to “ life, liberty, and the pursuit of happiness. Not the right to “ stand and justify their existence”. Not to “ pay the government to run my life”. Not even to “ have the government protect me from myself”. The founding fathers believed in freedom. There wasn’t even income tax! If they saw the level of government involvement in the economy, they would be rolling in their graves. No government has the ability to manage your finances, or your health care, anything else that is a fundamental right.
The system in America is one of the best in the world. If our system is so good, then why are we trying to imitate those that are totally failed? It’s not like the economy in the rest of the world is doing much better than ours. Maybe our previously booming economy was due to the health care system that made up one-sixth of it.