What will happen with the equilibrium price, quantity and producer and consumer surplus? Who will benefit or lose more from the changes, and what does this depend on?

ECON0002: Economics Term 1, 2019-20

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Assignment 8
Please note that this assignment should be submitted using the relevant Turnitin link on Moodle. Before you do so, you will need to complete the Self-Evaluation Survey.

COMPLETE ALL MCQs IN UNIT 8 OF THE E-BOOK. In preparation for this tutorial, you should complete ALL the multiple choice question in the free e-book, The Economy. Please note that each incorrect option has an explanation attached to it which will be shown if you choose that option. Use this feature to further your understanding. In your tutorial you can ask and discuss those questions you found particularly difficult.

COURSEWORK COMPONENT TO BE SOLVED BEFORE CLASS AND UPLOADED VIA TURNITIN: Answer the following 2 questions and submit them through the Turnitin link (in the Tutorial Assignments Block) on the Moodle page. Please type your answers if at all possible, and scan in any hand-drawn diagrams etc. Submitting your questions is part of the coursework component for this course. Failing to do so may affect your eligibility to take the final exam.

IN THE TUTORIAL: You will be asked to complete at least ONE additional MCQs during the tutorial. This question will be more representative of the questions you will be asked in the exams. The e-book MCQs are essential preparation for the tutorial, for the additional MCQs, and eventually for the exams.

In addition, we will discuss the two questions below, which you will have prepared and submitted before the tutorial. Your tutor will give you written feedback in Turnitin on one of the questions and will give verbal group feedback during the tutorial.

ECON0002: Economics Term 1, 2019-20 London
Question 1.
1. In a perfectly competitive market the demand is Q = 27 – 2P and the supply is Q = P – 3. Answer this question graphically and also analytically whenever possible. a. What is the equilibrium price, quantity, producer and consumer surplus in equilibrium? b. Suppose the government announces a tax of 3 per unit of the good. What is the new equilibrium price, quantity, producer and consumer surplus, government revenue and dead weight loss? c. Suppose the income of the consumers in this economy increases, and that the good is a normal good. What will happen with the equilibrium price, quantity and producer and consumer surplus? Who will benefit or lose more from the changes, and what does this depend on?

Question 2:
In The Economy, answer Exercise 8.4 (Unit 8)

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