Question

If the price of ice-cream falls what happens to the demand for ice-cream?

It rises.

If falls.

Nothing.

It rises but then falls back as we buy more. A minimum wage is a price floor on wages - we will more closely consider the issue at the end of the quarter. But we can already extend the discussion on price floors we read about to this one ...,The argument that the costs and benefits of an increased minimum wage are "not transparent" means that: The benefits outweigh the costs and, as such, we should raise the minimum wage. It is hard to "add up" the costs and benefits so it is difficult to know if it is working. We should not raise the minimum wage even if the benefit outweigh the costs. The costs outweigh the benefits and, as such, we should not raise the minimum wage. The supply and demand curves for a new calculator are given by the following: (by the way, please solve this without using a calculator...) Qs = $20 + 2P Qd = $100 - 3P Solve for equilibrium price and quantity: P = 16 Q = 52 P = 25 Q = 5 P = 5 Q = 25 P = 20 Q = 16 When it comes to public policy, the issue of targeting means: Who is paying the costs? Is the $US cost of the program clearly stated? Do the benefits outweigh the costs? Is the policy helping those that it is intended to help?

Answer 1

• If the price of ice-cream falls, the quantity demanded of ice cream rises. This is because there is an inverse relationship between quantity demanded and the price of the commodity. Thus, there will be a expansionary movement along the demand curve.
• The argument that the costs and benefits of an increased minimum wage are not transparent means that it is difficult for the people to understand its impact on the economy as the costs and benefits are not clear whether the policy is hurting or helping the people. Thus, it is hard to add up the costs and benefits so it is difficult to know its working.
• In equilibrium, quantity demanded = quantity supplied.

Qs= 20+2p and Qd= 100-3p

So in equilibrium, 20+2p = 100 - 3p

Or, 5p = 80 or, p=16.

when p=16, q= 20+2p = 20+(2*16) = 20+32 = 52

So, q=52

• Targeting means setting focus on a particular set of people and forming policies for the welfare of the people. The issue of targeting means if the policy is helping those that is intended to help.