1. Suppose demand and supply functions are given by Qs = 5 + P and Qd =50 - ½P respectively. Then the equilibrium QUANTITY is what?
2.In the equation Y = 6 - 2.0X the y-intercept is?

This article is a question and answer for the economics of consumer and producer surplus.  The following question was presented:

I have an equilibrium chart where supply and demand intersect at 5. The price is 1$ for 1 good. The question is: assume that the cost of producing that good increases by 2$ at every possible quantity. Recalculate the consumer and producer surplus at this new equilibrium and determine if it is efficient.

My original chart has a max height of 10 and max width of 10. The supply and demand curves intersect at 5 high 5 long.

The following information is found on many places on the web, and some have asked questions about the economics occuring in the passage. At the end of this post, I will go over some economic questions, and show the related graphs to detail their relationship with the ideas stated in this article:

"Should Governments Legalize and Tax Marijuana?

The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a recent study for the Fraser Institute, Economist Stephen T. Easton attempted to calculate how much tax revenue the Canadian government could gain by legalizing marijuana.

This post goes over a common supply and demand shifters in a coffee market context, and how each of the following events will affect market for coffee:

Not having a clear understanding of these two ideas gets a lot of students in trouble.  It is actually quite easy to distinguish the difference between the two but at first glance they sound very similar.  Basically by definition, “demand” is one certain curve represented on the price quantity graph.  It is the curve that we see, and when we have a change in demand, then we are moving the curve that is on the graph.  Also, when there is a change in the determinants of demand (ie. # of buyers, income, tastes and preferences, prices of related goods) then we will have change in demand because the actual demand curve is shifting.  An example of this is shown on the graph below:

Companies like groupon give consumers who buy their product a big discount, but don't really "produce" anything in the classic sense. They serve almost as an advertising agency to promote a company's product. For example, I was exploring their site the other day and saw a coupon for an Asian restaurant. Now I usually have no desire to try new restaurants unless a friend recommends them to me. To put this into a supply and demand related example, my willingness to pay (or marginal benefit) from trying a new restaurant is really low. Likewise, I would be located far to the right on our typical supply and demand model.

This posting is a little off topic, but I thought it best to vent some of my frustration at the grant writing process.  Think of a market equilibrium, where we, the researchers would like to apply for grants.  The X axis has quantity of grants, and the Y axis has amount given (in money).  We are the supply side, trying to get these grants by supplying our labor.  The demand side would be institutions and the government, putting money forward to to get research done.


In good times, there is a lot of money on the demand side, which will shift out the demand for research (increasing demand), so that everything else equal we see a larger quantity of grants given as well as larger amounts.  In good times, it is also easier to find jobs, and get other sources of funding, so the supply side shifts left, meaning a lower equilibrium quantity, but a greater equilibrium payout.

However in bad times, demand for research shifts left (lower amounts of funding), and supply of research shifts right (more academics seeking funding).  This results in an ambiguous change in quantity of grants given out, but much less average dollar size for grants.  This is especially depressing for those of us trying to get grants as beginning academics.

So that is a brief story of why yours truly has been trying to get a sizable grant for almost a year now, and in the end has not landed a big one, but several small ones. 

You can see another funny article about grants, from the journal "nature" here