I. Consider the following demand and supply curves:
QD = 40 â€“ 15P
QS = 6 + 2P
1. Use these two equations to solve for the market clearing price and quantity.
2. Draw the diagram.
3. In the diagram, indicate Consumer Surplus.
4. In the diagram, indicate Producer Surplus.
II. An entrepreneur has the opportunity to start a firm. The entrepreneurâ€™s current income is $300,000. Should the entrepreneur start the firm? Use the following data to compute the profit from the start up. Suppose that the entrepreneur knows that:
Firm revenue: $6,000,000
Wage Costs:Â Â Â $4,500,000
Capital Costs (machines, buildings, etc.): $1,000,000
III. Please use FRED:Â http://research.stlouisfed.org/fred2/Â (Links to an external site.)
A. Plot GDP for the U.S.
B. Plot inflation for the U.S.
C. Plot unemployment for:
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