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1. Suppose the demand and supply schedules for copper in the United States are as follows:
a. What is the equilibrium price for copper in the United States, assuming that there is no trade with the rest of the world? What amount of copper will be exchanged? Now suppose that the United States market is opened up to the rest of the world, where the price is $250 per ton. b. Once opened to trade, will the U.S. price remain at its no trade level? What will be the United States price? c. Will the United States import copper? How much will be imported? Now suppose that the United States imposes a $50 per ton import fee on imported copper. d. What will happen to the price that the United States pays for copper? e. What is the new level of imports? f. (difficult) What is the total amount of fees paid to the United States government?
2. Illustrate the following with supply and/or demand curves: a. A shortage of housing caused by a rent control law that sets a ceiling price for housing. b. The supply of tickets to a concert in a hall that has exactly 500 seats. c. The price of gasoline rises, shifting the demand for large automobiles.
3. Suppose that only 300 tickets are available to see a field hockey game. If a market for these tickets existed, the supply curve and demand curve would intersect at a price of $28 per ticket. a. What does the supply curve look like? In the interest of fairness, the ticket agency decides to offer the tickets for sale at $20 each. b. Does quantity supplied equal quantity demanded when the price is $20? What happens? c. How do you think the tickets will be rationed? d. Suppose you would like to go if it only costs $20, but you decide not to go when you discover you would have to stand in line for an hour to get the ticket. A friend of yours offers to get you the ticket if you pay her $30, and you say yes. What does this tell you about the value of your time?
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