Q1:Rice+Producer+NarrativeSuppose that the wage rate faced by the farmer increases to $4,000. Then,

Q1:Rice+Producer+NarrativeSuppose that the wage rate faced by the farmer increases to $4,000. Then, the farmer will produce_________metric tons of rice to maximize profit.Now suppose there is no change in the wage rate, but due to a technological improvement the marginal product of labor (MPL) increases by 50% at every level of output produced. As a result, the farmer will produce _______ metric tons of rice to maximize profit.Q2: Narrative – The Green Paradox.pdfPrior to the implementation of the energy conservation policies by Group 1 countries:Oil consumption in Group 1 countries = _________ unitsOil consumption in Group 2 countries = ________unitsWorldwide production of oil =______ unitsAfter the implementation of the energy conservation policies by Group 1 countries:Oil consumption in Group 1 countries =________ unitsOil consumption in Group 2 countries =_______unitsWorldwide production of oil =________ unitsQ3: Narrative – Ethanol MandateConsider the information in the attached file. In the absence of a ethanol mandate the equilibrium price of corn would be _______ dollars per bushel and ________ billion bushels of corn would be produced in equilibrium.After the implementation of the mandate the equilibrium price of corn would be ________dollars per bushel and_______ billion bushels of corn would be produced. Of this amount of corn produced _________ billion bushels would be purchased by refineries and ????? billion bushels by households, dairies, and other consumers.Q4:Narrative – Ethanol MandateWhy did the chicken cross national borders? Consider the information in the attached file. Now let’s relate some seemingly unrelated events to each other. Suppose that the U.S. lifts economic sanctions on Iran and as a result Iran is now able to produce oil and supply it to the international markets. This event pushes down the price of oil and as a result U.S. motorists buy more gasoline (actually it is predicted that the price of oil may go down to $10 per barrel–used to be around $100 per barrel once!) Since 10 percent of refined gasoline must contain ethanol, and since ethanol requires corn for its production, demand for corn by U.S. refineries will increase. Suppose that demand for corn by the refineries doubles. This event will cause the price of corn to increase to _________ dollars per bushel and as a result the quantity of corn demanded by U.S. households and dairies will decease to ________ billion bushels per year. Note that a decrease in the price of oil will make you pay less for gasoline but more for chicken and eggs!Q5:Narrative – Ethanol MandateConsider the information in the attached file and assume that the ethanol mandate is in place. Ignore about lifting economic sanctions on Iran and the resulting reduction in oil prices. This time assume that the severe drought in California causes the supply of corn to decrease by 10 billion bushels. This event will cause the equilibrium price of corn to increase to _________ per bushel. Moreover, the equilibrium quantity produced will drop to ________ billion bushels per year. Of this amount, refineries will buy _______ billion bushels and the remaining consumers _______ billion bushels.Q6:Narrative – Short Run and Long RunConsider the information in the attached file. Currently:Consumer surplus = _______ dollars.Producer surplus = _______dollars.Total surplus = _________ dollars.Number of firms = __________An individual firm’s total revenue = ___________ dollarsAn individual firm’s fixed cost = _________ dollarsAn individual firm’s variable cost = _________ dollarsAn individual firm’s economic profit = _________ dollarsQ7:Narrative – Short Run and Long RunConsider the information in the attached file. If the production level is Q = 1,000 units (underproduction), there will develop a deadweight loss of ________ dollars and the total surplus will equal__________ dollars. But if the production level equals Q = 4,000 units (overproduction), then the deadweight loss will equal _________ dollars and the total surplus will equal __________ dollars. Later in the class we will learn how we can have under and overproduction.Q8: Narrative – Short Run and Long RunConsider the information in the attached file. Suppose that due to a technological breakthrough the long run average total cost decreases by 40 percent. In the short run each firm will make an economic profit equal to _________ dollars. This positive economic profit will induce entry of new firms into the market. In the long run the equilibrium quantity will increase to _________ units, the equilibrium price will decline to __________ dollars, and there will be ________ firms in the market. Moreover, the total surplus will increase to ________ dollars.Q9:Narrative – Short Run and Long RunConsider the information in the attached file. Ignore about what happened in the previous question. Assume that this is a constant cost industry. Suppose that demand for this product permanently increases by 3,000 units. In the short run the equilibrium price will equal ________ dollars, the equilibrium quantity will be _________ units, and there will be _________ firms in the market each making an economic profit of _______ dollars. In the long run the equilibrium price will equal _________ dollars, the equilibrium quantity will be _________ units, and there will be _________ firms in the market each making an economic profit of ________ dollars.

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