# Bu204 Unit 3

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Carolyn Davis BU204 Assignment 3 November 6 2012 Unit 3 Assignment Question: The small town of Middling experiences a sudden doubling of the birth rate. After 3 years, the birth rate returns to normal. Use the graphs for each question, adding any arrows or other indicators that you feel are necessary, to illustrate the effect of these events on the following. 1. What is the effect on the market for an hour of babysitting services in Middling today, during this increased birthrate? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes. The effect on the market is as the baby population increases, the demand for baby sitters increase, so the price for a baby also increases. The graph reveals this. If we look at D1, we can measure that because the baby population was lower, baby sitters were cheaper. Yet, as the baby population increases to D2, the price also increases due to the shortage of means. Notice also the point of equilibrium moving up and to the right where D2 intersects S1. 2. What is the effect on the market for an hour of babysitting services 14 years into the future, after the birth rate has returned to normal, by which time children born today, during this increased birthrate, will be old enough to work as babysitters? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes. There is the precise reverse result happening now. The baby population is back to normal; but there is an excess of potential babysitters. This will generate very good fees as the teenagers try to trade their babysitting packages. The graph below reflects this. D1 is the babies that need babysitters. S1 was the original amount of potential babysitters, but has