Coke Pepsi Peanut Butter Jelly A forest fire

Coke Pepsi

Peanut Butter Jelly

A forest fire occurs that burns millions of acres of timber. What happens to the market for copper piping? Your market is: Copper Piping

The economy moves out of the recession into a boom period. What happens to the market for secondhand clothing? Your market is: Secondhand Clothing

Are taxicab rides in New York City expensive or inexpensive in relative terms?

Why do Chicago garbage workers make $80, 000 a year?

Why do college professors make over $100, 000 a year?

Area of consumer S surplus $15 $14 $13 $12 $11 $10 $9 $8 P $3 $4 $7 $6 $5 $2 Area of producer surplus D $1 Q 8

AA Indicate a price floor on your graph. Pf S Pf P D 00 Q

AA Indicate the Qd and the Qs S C B Pf Pf P D 00 Qd Q Qs

A Add a dashed line at F S C B Pf P H D Pf E G F D 0 Qd Q Qs

A S C B Pf P H D Pf E G F D 0 Qd Q Qs

A Indicate the quantity sold in the market. C B Pf P H D S Pf E G F D 0 Qd Q Qs

A Indicate the consumer surplus after the P floor. B Pf P H D Pf A B C S Pf E G F D 0 Qd Q Qs

A What do the areas DBE and FDE indicate? B Pf P H D Deadweight Loss C S Pf E G F D 0 Qd Q Qs

A What does the area 0 Pf B F indicate? Producer Surplus B Pf P H D S C Pf E G F D 0 Qd Q Qs

A S P E D 0 Q

A S P E D 0 Q A per-unit excise tax is placed on this product.

S 1 A S P E Costs D 0 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 E P D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 E P Draw a Ps dashed line where Q 1 touches S 1. 0 D Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 P Ps B C E Place the following dots on the graph: B, C, D D D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 P Ps B C E What has happened to consumer surplus because of the tax? D D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 P Ps B C E What has happened to producer surplus because of the tax? D D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 P Ps B C E What is the area of the tax? D D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 P Ps B C E What is the area of deadweight loss? D D 0 Q 1 Q A per-unit excise tax is placed on this product.

S 1 A S P 1 B P C Ps Draw a graph next to the graph you just drew, but make the demand curve relatively INELASTIC. E D D 0 Q 1 Q A per-unit excise tax is placed on this product.

P Pc are set BELOW the equilibrium $1, 600 P price. Pc is the highest price D that can be Q Q charged in the market. Fair market price of apartments in NYC is $1, 600 NYC has rent controls which are price ceilings. Where do you think price CEILINGS are set? BELOW or ABOVE the market price? S

P S $1, 600 P Pc $1, 200 D Q Q Rent controls are a price set by the government to keep prices of apartments down. In NYC the government sets the HIGHEST PRICE that can be charged for a one-bedroom apartments at $1, 200. Landlords cannot charge above this price.

P S $1, 600 P $1, 200 Anytime Qd > Qs there is a SHORTAGE in the Pc market. D Q Q Qs Q Qd < Looking at the graph, what occurs when the price is set BELOW the equilibrium price when a PRICE CEILING is set? The Quantity Demanded > the Quantity Supplied

This is the number of apartments landlords are willing to supply at this price (Qs). S P $1, 600 This is the number of people willing to rent apartments at this price (Qd). P Pc $1, 200 D Q <Q Q Qs Qd This is a SHORTAGE.

P S $1, 600 P Pc $1, 200 D Qs <QQ Qd Q _____ is looking for an apartment in NYC.

PRICE CEILING—THE HIGHEST PRICE THE SELLER CAN SELL THE PRODUCT. P $1, 600 S P Pc $1, 200 D Qs Q <Q Qd Q

To fly from Chicago to Minneapolis it cost In 1975 Minneapolis San Fran. $169 $69 Chicago Los Angeles To fly from Los Angeles to San Francisco it cost WHY?

In 1975 This is INTERSTATE travel. San This Fran. Minneapolis is INTRASTATE $169 travel. (inside the state) $69 Los Angeles Chicago

P S Pf P D Q Q Interstate travel was regulated by the Civil Aeronautics Board. It set the prices for flights traveling across state lines. It set a PRICE FLOOR. Where is a PRICE FLOOR set? Above or BELOW the equilibrium price? ABOVE.

P S Pf P D Q Q Why is it called a price FLOOR if it is set ABOVE the equilibrium/market price? Because it is the LOWEST price that can be charged by law.

S P $169 $69 Pf P $169 D $69 Q Q Which route is the market price and which route is the PRICE FLOOR? The market price is $69, the price charged between Los Angeles and San Francisco. The PRICE FLOOR is $169, the price charged between Chicago and Minneapolis.

$169 $69 S P Whenever there is $169 a PRICE FLOOR $69 P the Quantity Supplied is greater than the Quantity Demanded. Pf D Qd Q < Qs Q

$169 $69 P Qd of Qs of seats < seats S $169 A price floor $69 causes a SURPLUS in the market. Pf P D Qd Q < Qs Q

$169 $69 Pf P D Qd Q < Qs Q What price did the airlines charge customer flying from Chicago to Minneapolis? $169 If airlines couldn’t compete by price since they all charged the same price, how did airlines compete? Service: Best food, bigger seats, prettiest flight attendants.

http: //www. 1 jetsettravel. com/Picts/22 Plncbn. jpg Surplus of seats available because of the price floor. http: //www. transport-pf. or. jp/english/sky/airplane/exploration/img/jal-mesi. jpg Airlines competed by serving better food. Prettiest stewardess

As deregulation of the airline industry took place in 1978, what happened to the price floor? S P $169 $69 Pf P D Qd Q Qs Q

As deregulation of the airline industry took place in 1978, what happened to the price S P floor? $169 $69 Pf P D Qd Q Qs Q The price floor is eliminated, lowering the price to the market price. This gets rid of the surplus. People get to fly for lower prices, but the airplanes are now more crowded.

S $5 D D 40, 000 The Toledo arena holds a maximum of 40, 000 people, as indicated in the graph above. Each year the circus holds eight performances, all of which are sold out. (a) Analyze the effect on each of the following of the addition of a fantastic new death-defying trapeze act that increases the demand for tickets. (i) price of tickets (ii) quantity of tickets sold

S $5 D 40, 000 (b) The city of Toledo institutes an effective price ceiling on tickets. Explain where the price ceiling would be set. Explain the impact of the ceiling on each of the following. (i) The quantity of tickets demanded (ii) The quantity of tickets supplied

S $5 D 40, 000 (c ) Will everyone who attends the circus pay the ceiling price set by the city of Toledo? Why or why not?

S $5 D D 40, 000 The Toledo arena holds a maximum of 40, 000 people, as indicated in the graph above. Each year the circus holds eight performances, all of which are sold out. (a) Analyze the effect on each of the following of the addition of a fantastic new death-defying trapeze act that increases the demand for tickets. (i) price of tickets (ii) quantity of tickets sold

P 1 $5 S This new act causes the Demand curve to shift to the right, D 1 causing price to go up and quantity to remain the same. 40, 000 (a) Analyze the effect on each of the following of the addition of a fantastic new death-defying trapeze act that increases the demand for tickets (i) price of tickets (ii) quantity of tickets sold

S $5 D Pc 40, 000 (b) The city of Toledo institutes an effective price ceiling on tickets. Explain where the price ceiling would be set. The price ceiling is set below the equilibrium P of $5.

S $5 Pc D 40, 000 Qd 1 (b) Explain the impact of the ceiling on each of the following. (i) The quantity of tickets demanded increases.

S $5 Pc D 40, 000 Qd 1 (b) Explain the impact of the ceiling on each of the following. (ii) The quantity of tickets supplied remains the same.

S $5 Pc D 40, 000 Qd 1 (c ) Will everyone who attends the circus pay the ceiling price set by the city of Toledo? Why or why not? No, a secondary market (black market) occurs. Scalpers will get higher prices because Qd >Qs.