Module 9 9:1 & 9:2

Worksheet 9.2: Graphing QuotasPeanuts! Draw a correctly labeled graph that shows a hypothetical supply and demand curve for the peanut market in the US. 1. Show the equilibrium at $50 and 100 tons of peanut. 2. Illustrate the line that would show a quota of 150 tons of peanuts. What effect would this have in the market? 3. Draw the line that would show a quota of 50 tons of peanuts. What do we call the area that is created by this quota? 4. With a quota of 50 tons of peanuts, would the demand price be higher or lower than equilibrium? 5. With a quota of 150 tons, would the supply price be higher or lower than equilibrium? Worksheet 9.1: Graphing Quotas Now, Construct your own graph using the data given below for liquor licenses in the town of Budville. Set a quota at the quantity of 30 liquor licenses per year. . . Clearly label the quantity demanded and supplied at this quota. Label the deadweight loss. On the graph, show the "wedge". Explain the "wedge". Price Quantity demanded $1,000 Quantity supplied 90 2,000 10 80 20 3,000 70 30 4,000 60 40 5.000 50 50 6,000 40 60 7,000 30 70 8,000 20 80 9.000 10 90