Assignment

Question 1

Use the following schedule to answer the questions below.

a) Graph the demand curve and supply curve on the same graph.
b) Identify the equilibrium point on the graph in a clear manner.
c) Answer the following questions.
a. What is the equilibrium price?
b. What is the equilibrium quantity?
c. What is the surplus at a $7 price floor?
d. What is the quantity sold in the market place at a $7 price floor?
e. What is the shortage at a $3 price ceiling?
f. What is the quantity sold in the market place at a $3 price ceiling?

Question 2

Use the following schedule for the coffee market to answer the questions below.

a) Draw the initial demand and supply curves based on the values given in the table above.

b) Suppose the quantity demanded rises by 20 million pounds of coffee per month at each price. On a single graph draw the initial demand and supply curves based on the values given in the table above and draw the new demand curve given by this change.

c) Suppose the quantity demanded falls, relative to the values given in the above table, by 20 million pounds per month at prices between $3 and $6 per pound; at prices between $7 and $9 per pound, the quantity demanded becomes zero. On a single graph draw the initial demand and supply curves based on the values given in the table above and draw the new demand curve given by this change.

d) Suppose the quantity supplied rises by 20 million pounds per month at each price, while the quantities demanded retain the values shown in the table above. On a single graph draw the initial demand and supply curves based on the values given in the table above and draw the new supply curve given by this change.

e) Suppose the quantity supplied falls, relative to the values given in the table above, by 20 million pounds per month at prices above $5; at a price of $5 or less per pound, the quantity supplied becomes zero. On a single graph draw the initial demand and supply curves based on the values given in the table above and draw the new supply curve given by this change.

Question 3

The problems below are based on the following demand and supply schedules for corn (all quantities are in millions of bushels per year).

a) Draw the demand and supply curves for corn. Label the equilibrium quantity and price.
b) Suppose the government now imposes a price floor at $4 per bushel. Show the effect of this program graphically.

Question 4

The problems below are based on the following hypothetical demand and supply curves for apartments.

a) Draw the demand and supply curves for apartments.
b) At each price, determine whether there is a surplus or shortage and by how many units.

Question 5

Supply and demand for movie tickets in a city are shown in the table below. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following two changes.

a) Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price.

b) The city eliminates a tax that it had been placing on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by 10%.