NEED ASAP Supply and Demand Graphs
amada.9book1.xlsx
Question 1
Explain using a supply and demand curve the effects of an increase in minimum wage. According to U.S. Department of Labor, effective July 24, 2009, the national minium wage was $7.25/hour; therefore, research the current minimum wage rate on the labor market, identify the number of workers in the labor force in July 2009 and October 2014 to illustrate your conclusions. | |
Labor Force Statistics form the Currency Population Surveu Original Data Vaue | |
ANSWER | |
If labor market is in equilibrium, the wage rate would be W0 and the quantity of labor demanded would be at Q0. | |
If the government initiatives a minimum wage above the equilibrium wage, we can expect a fall in demand | |
for labor (from Q0 to Q1) and therefore, there would be excess supply of labor (Q2 – Q2). When there is | |
lower employment, the most likely scenario is a negative impact of aggregate demand, as people would | |
spend less, leading to lower aggregate demand. | |
The national minimum wage rate was $7.50 in the years 2009 through 2014 and currently remains the | |
same. The civilian labor force participation rate was at 65.5 percent in January 2009 and actual employed | |
workers stood at 142,152 (in thousands), and actual employed workers stood at 145,092 in January 2014. | |
There was an increase in labor force participation through these years, but the minimum national wage | |
remained the same throughout. | |
GRAPH BELOW |
Question 2
In Anywhere, USA, the demand function of a gym membership is Qd = 600-50p+ 0.6Y. Where Qd is quantity demand per month, p is the price of a membership, and Y is the average monthly income in the town. The supply function of gym memberships is Qs =100+20p -20w, where Qs is the number of memberships and w is the average hourly wage of trainers. | |||
a. If Y=$5000 and w = $10, use Excel to calculate quantity demanded and quantity supplied for p=5, 10, 15, 20, 25, 30, 35, 40. Determine excess shortages or surpluses.Use Excel to illustrate the supply and demand curves. | |||
Quantity Demanded | Quantity Supplied | Price | Shortage |
3350 | 0 | 5 | -3350 |
3100 | 100 | 10 | -3000 |
2850 | 200 | 15 | -2650 |
2600 | 300 | 20 | -2300 |
2350 | 400 | 25 | -1950 |
2100 | 500 | 30 | -1600 |
1850 | 600 | 35 | -1250 |
1600 | 700 | 40 | -900 |
b. Assume Y increases to $6875 and w increases to $15. Use Excel to recalculate quantity demanded and quantity supplied for p=5, 10, 15, 20, 25, 30, 35, 40.Illustrate supply and demand curves. Explain the change in equilibrium. | |||
Quantity Demanded | Quantity Supplied | Price | |
4475 | -100 | 5 | |
4225 | 0 | 10 | |
3975 | 100 | 15 | |
3725 | 200 | 20 | |
3475 | 300 | 25 | |
3225 | 400 | 30 | |
2975 | 500 | 35 | |
2725 | 600 | 40 |
Question 3
The marketing department of Acme Inc. has estimated the following demand function for it Febreze Car Vent Clip Air Freshener, 1-count: Q = 200-5p,where Q is the quantity (sold in thousand units) and p is the price for one (1) Febreze Care Vent Clip Air Freshener. Using Excel, calculate the point price elasticity of demand, ε, for price, p = 1, 2, 3....., 20. Describe the pattern of price elasticity of demand that you have calculated along the demand curve. | |||||
Quantity | Price | Elasticity (ε) | |||
195 | 1 | Graph as well | |||
190 | 2 | 0.04 | 0.04 | should be answer | |
185 | 3 | 0.07 | |||
180 | 4 | 0.10 | |||
175 | 5 | 0.13 | |||
170 | 6 | 0.16 | |||
165 | 7 | 0.19 | |||
160 | 8 | 0.23 | |||
155 | 9 | 0.27 | |||
150 | 10 | 0.31 | |||
145 | 11 | 0.36 | |||
140 | 12 | 0.40 | |||
135 | 13 | 0.45 | |||
130 | 14 | 0.51 | |||
125 | 15 | 0.57 | |||
120 | 16 | 0.63 | |||
115 | 17 | 0.70 | |||
110 | 18 | 0.78 | |||
105 | 19 | 0.86 | |||
100 | 20 | 0.95 |