(a) Demand and supply curve when minimum wage is non-binding on market equilibrium . (b) New demand and supply curve showing new market equilibrium. Concept Introduction Market Equilibrium: Market equilibrium is the situation when the demand is equal to the liability. The price at this point is known as equilibrium price and the quantity at this point is known as equilibrium quantity . Deadweight Loss : Deadweight loss is a situation when there is a loss suffered due to inefficiency in the market, when the equilibrium point is not achieved. Price Floor : When the government fixes the minimum price of a good or service, it is known as a price floor. Price floor is fixed by the government to protect the price from going too low.

Question

1. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate fund, and the third is a (riskless) T-bill money market fund that yields a rate of 8%. The probability distributions of the risky funds have the following characteristics: Standard Deviation (%) Expected return (%) Stock fund (Rs) 20 30 Bond fund (RB) 12 15 The correlation between the fund returns is .10.

Answer 1

Question

Chapter 5, Problem 12P

To determine

(a) Demand and supply curve when minimum wage is non-binding on market equilibrium.
(b) New demand and supply curve showing new market equilibrium.

Concept Introduction

Market Equilibrium: Market equilibrium is the situation when the demand is equal to the liability. The price at this point is known as equilibrium price and the quantity at this point is known as equilibrium quantity.

Deadweight Loss: Deadweight loss is a situation when there is a loss suffered due to inefficiency in the market, when the equilibrium point is not achieved.

Price Floor: When the government fixes the minimum price of a good or service, it is known as a price floor. Price floor is fixed by the government to protect the price from going too low.

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Can you show me the answers for parts a and b? Thanks.