Jubail Industrial College Supply Demand & Market Equilibrium Worksheet
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Macroeconomics Assignment
Chapter 4 & 6: Case Study: Supply, Demand, and Market Equilibrium:
Learning Outcomes:
1. Define the institutional framework of macroeconomic policymaking. [CLO 1.1]
2. Analyze economic problems within the conceptual framework of mainstream
macroeconomics. [CLO 2.1]
Reference Source:
Textbook: – Mankiw, N. Gregory. Principles of Macroeconomics, 6th ed. Mason, OH: South-
Western Cengage Learning, 2011. ISBN: 9780538453066 (hard copy); ISBN: 9781115468523
(eBook)
Case Study:1 (5 Points)
Please read the case Two Ways to Reduce the Quantity of Smoking Demanded from
Chapter 4 Supply, Demand, and Market Equilibrium Page: – 71 given in your textbook
Principles of Macroeconomics. The case study presented in the chapter discussed cigarette
taxes as a way to reduce smoking. Now think about the markets for other tobacco product such as
cigars and chewing tobacco. and Answer the following Questions:
Questions:
1.1. Are these goods substitutes or compliments for cigarettes? (100 150 words)
1.2.Using a supply and demand diagram, show what happens in the markets for cigars and
chewing tobacco if the tax on cigarettes is increased. (100 150 words)
1.3.If policy makers wanted to reduce total tobacco consumption, what policies could they
combine with the cigarette tax? (100 150 words)
1.4.How can we reduce the consumption of cigarettes in economics? (100 150 words)
Important Note: – Support your submission with course material concepts, principles, and
theories from the textbook and at least two scholarly, peer-reviewed journal articles.
Case Study:2 (5 Points)
Please read the case The Minimum Wage from Chapter 6 Supply, Demand, and Government
Policies Page: – 117 given in your textbook Principles of Macroeconomics. A case study
discusses the federal minimum-wage law.
Questions:
2.1.Suppose the minimum wage is above the equilibrium wage in the market for unskilled
labor. Using a supply and-demand diagram of the market for unskilled labor, show the
market wage, the number of workers who are employed, and the number of workers who
are unemployed. Also show the total wage payments to unskilled workers. (100 150
words)
2.2.Now suppose the secretary of labor proposes an increase in the minimum wage. What
effect would this increase have on employment? Does the change in employment depend
on the elasticity of demand, the elasticity of supply, both elasticities, or neither? (100
150 words)
2.3.What effect would this increase in the minimum wage have on unemployment? Does the
change in unemployment depend on the elasticity of demand, the elasticity of supply,
both elasticities, or neither? (100 150 words)
2.4.If the demand for unskilled labor were inelastic, would the proposed increase in the
minimum wage raise or lower total wage payments to unskilled workers? Would your
answer change if the demand for unskilled labor were elastic? (100 150 words)
Important Note: – Support your submission with course material concepts, principles, and
theories from the textbook and at least two scholarly, peer-reviewed journal articles.
Answer:
Case Study:1
1.1.
1.2.
1.3.
1.4.
Case Study:2
2.1.
2.2.
2.3.
2.4.
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Explanation & Answer:
Worksheet
Tags:
macroeconomics
supply
demand
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