Homework #1
This homework is based on the readings found in the Hall and Lieberman text, chapters 1 through 3.
Please submit your answers written neatly and legibly: partial credit can only be given if your work is orderly and relatively easy to follow. Please label all graphs completely.
1. For each of the following pairs of coordinates graph, identify the slope of the relationship, and write a linear equation in slope-intercept form.
a. (2, 6) and (-2, 4)
b. (0, 8) and (0, 2)
c. (6, 0) and (10, 0)
d. (-2, -5) and (-3, -10)
e. (100, 1) and (200, 2)
2. For each of the following pairs of equations find the equilibrium values for X and Y. Show your work.
a. Y = 5X + 10 and Y = 4X + 100
b. Y = -X + 50 and Y = 3X + 26
c. Y = -3X + 10 and Y = 6X + 9
d. Y = 100X + 500 and Y = -200X + 600
e. Y = 1000X + 1000 and Y = 2000X + 500
3. Suppose there are two individuals in an economy that produces two goods: cherry pies and roller blades. Suppose the possible production combinations are given by the table below:
|
Mark
|
Katherine
|
|
Cherry Pies
|
Pairs of Roller Blades
|
Cherry Pies
|
Pairs of Roller Blades
|
|
0
|
20
|
0
|
20
|
|
2
|
16
|
4
|
16
|
|
4
|
12
|
8
|
12
|
|
6
|
8
|
12
|
8
|
|
8
|
4
|
16
|
4
|
|
10
|
0
|
20
|
0
|
a. Mark is currently producing 4 cherry pies and 12 pairs of roller blades. If total production of cherry pies is 16 and total production of pairs of roller blades is 20, then how many cherry pies and pairs of roller blades is Katherine producing?
b. Is it possible for Mark and Katherine to increase their production of cherry pies and pairs of roller blades? Give a specific example to support your answer.
c. Who has the comparative advantage in producing pairs of roller blades? Explain your answer.
4. Suppose you are given the following information.
|
Price per unit
|
Quantity Demanded
|
Quantity Supplied
|
|
$10
|
600
|
200
|
|
$20
|
500
|
600
|
|
$30
|
400
|
1000
|
|
$40
|
300
|
1400
|
|
$50
|
200
|
1800
|
|
$60
|
100
|
2200
|
a. Write an equation for the demand curve using P as the symbol for price and QD as the symbol for quantity demanded. (Assume the Y variable is price and write your equation in slope-intercept form.)
b. Write an equation for the supply curve using P as the symbol for price and QS as the symbol for quantity supplied. (Assume the Y variable is price and write your equation in slope-intercept form.)
c. What is the equilibrium price and quantity in this market?
d. Suppose a tax of $5 per unit is levied on producers of this good.
i. What is the new supply curve with this tax?
ii. What is the new equilibrium price with this tax?
iii. What is the new equilibrium quantity with this tax?
iv. What is the net price per unit that producers receive once this tax is levied?
v. How much tax revenue does this tax generate?
vi. Does the producer or the consumer bear the greater economic burden with this tax?