Tuesday, November 30th, 2010

Answer to problem about illegal drugs:

1. Supply curve shifts because the US government is devoting billions of dollars each year to reduce the flow of drugs into the country.

2. Supply curve shifts to the left to reduce the amount of illegal drugs produced.

3. Price increases, quantity decreases.

4. Demand for illegal drugs is inelastic because drug users are addicted and therefore see the drugs as necessities.  Supply is also inelastic because it takes a considerable amount of time to produce more, so sellers cannot respond to a price change quickly.  Given this information, the graph should illustrate two mostly vertical lines.  When the supply shifts to the left, price increases dramatically, but quantity only falls slightly.  The large price increase, coupled with the addicted users, leads to an increase in drug-related crime as addicts resort to crime to pay for their habit.  Total revenue for sellers continues to increase, even with the reduction in supply, because of the inelastic demand for the product.

5. Drug-related crime increases because price has gone up so much, and addicts still need the drugs.

6. Rather than the supply curve shifting left, the demand curve would shift to the left instead as policymakers reduce the demand through drug education.  As a result, price would decrease, and quantity would decrease.  With a price decrease, sellers of illegal drugs would not make as much money and would lose total revenue.  This change might create an incentive to leave the drug market altogether.  There would also be a reduction in drug-related crime as a result of a price decrease.

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Thursday, November 18th, 2010

Understanding the Revolutions of 1848:

1. Complete the “Revolutionary Tour of Europe 1848-1849 map handout.  You are welcome to use any website to fill out the mapm, but a helpful one might be:

http://www.amitm.com/thecon/lesson4.html

Use colored pencils to shade each country a different color.

Before you go on to the next task, please show me your map to make sure you have labeled the bodies of water, countries, capitals, and centers of revolt correctly.  You will lose points if you do not show me your map before you leave today!

2. Find out why Russia and Great Britain did not see revolutions occur in their nations, and a write a paragraph about each.

To understand why revolution did not occur in Russia, you may use this website:

http://www.fortunecity.com/victorian/hornton/890/NicholasI.html

To understand why revolution did not occur in Great Britain, you must understand a movement called chartism that was going on there:

http://www.historylearningsite.co.uk/chartism.htm

(Hint: Think about how reforms occurred in Great Britain and why revolution was not necessary there.)

3. Homework: Complete the above tasks that you did not finish in class.

Wednesday, November 10th, 2010

Dear AP students,

You have a test tomorrow.  Below are the answers to the study review guide, which I gave out in class today.  Best of luck in your studying endeavors!

1.

a. Demand increases, price and quantity increase

b. Demand decreases, price and quantity decrease

c. Supply decreases, price increases, quantity decreases

d. Demand increases, price and quantity increase

e. Demand decreases, price and quantity decrease

f. Supply increases, price decreases, quantity increases

g. Demand increases, price and quantity increase

h. Demand increases, price and quantity increase

2. Price is unknown (ambiguous or indeterminate), quantity increases

3. Price increases, quantity increases

4. Quantity increases, price is unknown (ambiguous or indeterminate)

5. Quantity decreases, price is unknown (ambiguous or indeterminate)

6. Tax on sellers, price buyers pay increases, price sellers receive decreases, quantity falls, tax revenue = (tax)(quantity)

7. Decreases prices, causes a shortage, is inefficient (not in equilibrium)

8. Effective: above equilibrium price; ineffective: below equilibrium price. 

9.

a. $8, 8000 units

b. $3

c. $1

d. $2

e. $9

f. $6

g. Quantity decreased

h. Total revenue before the tax = ($8)(8000) = $64,000

i. Tax revenue after the tax = ($6)(6000) = $36,000

j. Total revenue after the tax = ($3)(6000) = $18,000

10. Creates a shortage of 4000 bikes; yes

11. Creates a surplus of 4000 bikes; yes

12. To help buyers by decreasing the price

13. To help sellers by increasing the price.

14. Minimum wage = price floor, set above the equilibrium price, helps some workers, hurts some (creates a surplus of labor, or unemployment)

15. Make sure that the binding price floor is above the equilibrium price.  The new QS represents workers seeking jobs.  The new QD represents employers seeking workers.  The wage is driven up.  The level of unemployment increases (because there is a surplus of labor at the higher wage).

16.

a. True

b. False

c. False

d. False

e. True

17.

a. False

b. True

c. False

d. False

e. False

18. Law of supply and demand: price adjusts to bring quantity supplied and quantity demanded into balance (equilibrium).

19. Many buyers and many sellers, similar/identical products, negligible/insignificant impact on price.

20.

a. P1

b. Q1

c. P3

d. P2

e. Area C + E

f. Area B + D

g. Demand shifts left.

h. Supply shifts left.

21. Both buyers and sellers.

22. Price buyers pay increases, price sellers receive decreases, quantity decreases

23. Number of buyers, tastes, expectations, income, prices of related goods

24. Changing price

25. Number of sellers, expectations, advances in technology, change in input prices

26. Who actually pays the tax (which curve shifts)