Suppose that concerns over childhood obesity in the South lead policymakers to consider vending machines with candy in schools to be a culprit. Right now, current candy prices are $2 per candy bar, but policymakers think this price is too low. They figure implementing a price floor in the market for candy of $3 per candy bar will help alleviate childhood obesity. Will this policy work? Describe the predicted impacts of this policy on consumer, producer, and total surplus as part of your answer clearly.

3 points--Mentioning effects
- 1 point--Price rises
- 1 point--Quantity falls
- 1 point--Surplus created
9 points--Changes in surplus
- 3 points--Consumer surplus down
- 3 points--Producer surplus ambiguous
- 3 points--Total surplus down/DWL exists
3 points--Will it work? Logic and discussion

Recall your response to question [Question Reference] in your multiple choice. Interpret the number of your answer as if to someone with no idea what elasticities are. If you were in charge of pricing chicken tenders in your store, what would you do to maximize the amount of revenue you raise from Shelley's purchases? Use the idea of quantity effects and price effects in your response and explain fully.

So long as your answer is consistent, no points off if you answered the multiple choice incorrectly.
7 points--Number from multiple choice
- 3 points--Number matches your response
- 2 points--Interpreting elastic/inelastic response in words (drastic response, versus not, without just mentioning the law of demand)
- 2 points--Interpret the number itself (A 1% change in P leads to a X% change in Qd)
8 points--Action and logic for revenue
- 3 points--Price down because any number in multiple choice is elastic
- 3 points--Logic of why dropping prices makes sense (strong consumer response)
- 2 points--Mentioning price and quantity effects with an indication of their definition

Assume you have made a decision to spend your Friday evening studying for your exams next week. How would you choose an optimal amount of time to study, using decision-making methods discussed in class? Assuming your answer considers costs and benefits (hint: it should.), indicate what you would expect to your costs and benefits to look like as you choose whether to continue studying each time interval.

6 points--Marginal analysis defined
3 points--MC defined and change explained
3 points--MB defined and change explained
3 points--Discussion of optimum

Suppose you are a government official and every market has an upward sloping supply curve. Which shape demand curve would likely generate the best possible outcome if your entire goal is to reduce consumption of a good, and you don't care about tax revenue? What would be true of deadweight loss in your example? Clearly explain how this shape demand curve would help you meet your goal as a government official.

6 points--Horizontal/shallow demand should be targeted
4 points--DWL maximized/tax revenue minimized
3 points--Logic of why DWL maximized/revenue minimized
2 points--Indication of whether goal met