Reference no: EM13204641

Identify changes in market conditions and their effect on equilibrium price and quantity for the following events: All events occur in the market for dental services. That is where the final good, dental services, are sold to consumers.

Event 1: The wages for all dental assistants increase, increasing the costs of inputs.
Answer the following questions:

A. Determine whether demand or supply changes, or both.
In the given event above, think about how dental assistants are related to dental services. Are they part of production or consumption? Once you have decided if they are part of production or consumption, state whether supply or demand has changed.

B. Determine whether the change is an increase or a decrease.
Before you answer, read the event again and see which determinant has changed. Then decide if that change results in an increase or a decrease.

C. Show the change in demand and/or supply on the graph of the initial equilibrium. (You will have one graph for each event.)
There is a graph showing the initial equilibrium in the Week 2 lesson. Once you have shown the initial equilibrium, in the same graph, you must show the change you decided upon in part A and B above.
Important: The grapher is required. It is not optional. You will earn no credit for using any other graphing utility.

D. Identify the result on the equilibrium price and quantity of dental services.
On the graph, show the two equilibrium points using the point plotting tool and a label. Do not forget to label each axis and each line.
Once you have shown that on your graph, you must state what happened to equilibrium price and quantity.

E. Insert the graph into a Word document. To paste the graphed image on a Word document, press and hold "ALT," then press "PrtScrn" while viewing the graphed image. Select a point on the Word document to paste the graph. Press and hold "Ctrl," then press "V."
You must submit your work on a Word document (.doc file extension) and do the print screen command as detailed above.

Event 2: The government provides national dental insurance benefits for all U.S. citizens that cover 100% of the cost of all dental services. There are two effects of this policy. First, there will be an increase in the number of consumers of dental services. Second, there will be fewer dentists willing to provide dental services, resulting in some dentists removing themselves from the market entirely.
Answer the following questions:

F. Determine whether demand or supply changes, or both.
Deal with each effect separately even though they are all part of the same event. In the given event above, think about how each of these effects will affect the market for dental services. Are they part of production or consumption? Once you have decided if they are part of production or consumption, state whether supply or demand has changed for each of the effects (the two highlighted sentences above).

G. Determine whether the change is an increase or a decrease.
Before you answer, read the event again and see which determinant has changed. Then decide if that change results in an increase or a decrease for each effect of the event. You have to answer separately for each effect (the two highlighted sentences above).

H. Show the change in demand and/or supply on the graph of the initial equilibrium. (You will have one graph for each event.)
There is a graph showing the initial equilibrium in the Week 2 lesson. Once you have shown the initial equilibrium, in the same graph, you must show the changes you decided upon in part A and B above. There are two changes because there are two effects.
Important: The grapher is required. It is not optional. You will earn no credit for using any other graphing utility.

I. Identify the result on the equilibrium price and quantity of dental services.
On the graph, show the two equilibrium points using the point plotting tool and a label. Do not forget to label each axis and each line. The two equilibrium points you are interested in is the first equilibrium and the last equilibrium after you have graphed the second effect.
Once you have shown that on your graph, you must state what happened to equilibrium price and quantity. Now remember, when demand and supply change, you will not be able to determine either the direction of price or quantity. You can unambiguously determine only one of the two. You need to explain this well because this is a critical part of this assessment.

J. Insert the graph into a Word document. To paste the graphed image on a Word document, press and hold "ALT," then press "PrtScrn" while viewing the graphed image. Select a point on the Word document to paste the graph. Press and hold "Ctrl," then press "V."
You must submit your work on a Word document (.doc file extension) and do the print screen command as detailed above.

 

Task 2: Interpreting Graphs

Identify and explain specific effects of price controls at given prices. Using the hypothetical information in the table on the market for gasoline, complete the following questions:

Price of Gasoline (per gallon) Quantity Demanded (millions of gallons per week) Quantity Supplied (millions of gallons per week)
$0.50 85 0
$1.00 75 15
$1.50 65 20
$2.00 55 25
$2.50 45 30
$3.00 35 35
$3.50 25 45
$4.00 15 55
Fill in the blanks highlighted in yellow. Please copy the text with the highlights and fill them in as they are.
Graph the demand and supply for gasoline using the myeconlab grapher software. Please start your graph at the origin and label each axis and each curve. (Note: Change the numbers on each axis. Label each axis and each curve. Start your graph from the origin.)
Insert the graph into a Word document. To paste the graphed image on a Word document, press and hold "ALT," then press "PrtScrn" while viewing the graphed image. Select a point on the Word document to paste the graph. Press and hold "Ctrl," then press "V." Plot your supply and demand curve given the information in the table. There are examples in the book and in the online lesson of how to plot each curve. I have to be able to see every point on your curve so make sure your graph is not squished together. If you are not sure how to do that, spend time in the graphing tutorial in the online lesson in Week 1.

Use the prices and quantities in the table to answer the following questions. Remember, the quantities are in millions.
Next, answer the following questions.

B. The equilibrium price of gasoline is _____ and the equilibrium quantity is ___. Refer to the book or online lesson examples.

C. The government imposes a price ceiling of $2.50 in this market. The prevailing price in this market is now _______. The quantity demanded is now _________ and the quantity supplied is __________. I have had a lot of questions on this. "Prevailing" is not an economics vocabulary term. The first sentence means what is the price that is in effect in this market? Use the information in the table. There are examples in the online lesson that show how to do this.

D. The price ceiling results in a (SURPLUS OR SHORTAGE) _______________ in the amount of _______. Look up the definition of a surplus or shortage. There are plenty of examples in the book and in the lesson. You should be able to tell if there is a surplus or shortage and the number of units.

Submission Requirements:
Attach a Word document for each task that contains all answers.
Format: Double line space, Times New Roman, 12-point font
Myeconlab grapher software must be used for the graphed image
A screenshot of the graphed image must be pasted to the Word document. Directions are listed within the assessment.
Evaluation Criteria.