Demand And Supply

Demand And Supply

ASSIGNMENT # 2:
CHAPTER 3:
PROBLEM # 37 U:

Price | 1 | 1.5 | 2 | 2.5 | 3 | 3.5 | 4 | 4.5 |
Demand | 375 | 350 | 325 | 300 | 275 | 250 | 225 | 200 |
Supply |   | 100 | 200 | 300 | 400 | 500 | 600 | 700 |

Price | 1 | 1.5 | 2 | 2.5 | 3 | 3.5 | 4 | 4.5 |
Demand | 575 | 550 | 525 | 500 | 475 | 450 | 425 | 400 |
Supply |   | -200 | -100 | 0 | 100 | 200 | 300 | 400 |

  (a) Af
  (b) Equilibrium price: $4.5
Equilibrium quantity: 400

PROBLEM # 43U:

  (a) A surplus of 20 (thousand litres)
  (b) A shortage of 40 (thousand litres)

PROBLEM # 48U:

  (a) Equilibrium price: $1.50
Equilibrium quantity: 90

  (b) Surplus
  (c) Quantity Demanded: (80 x 0.25) + 180 = 100
Quantity Supplied: (120 x 0.25) + 120 = 150

  * Quantity supplied (150) exceeds quantity demanded (100) => surplus of 50

  (d) Quantity Demanded: 80 – (80 x 0.25) = 60
Quantity Supplied: 120 – (120 x 0.25) = 90

  * Quantity supplied (90) exceeds quantity demanded (60) => surplus of 30

PROBLEM # 49U :

  (a) 100 billion are now traded.

  (b) Quantity Demanded ($100) exceeds quantity supplied ($90)
  * Shortage of $10 billion

PROBLEM # 52U:

  (a) Maximum price: $7
  (b) Surplus of $30 [quantity supplied = 80; quantity demanded = 50]
  * The quota scheme introduced bu the government will not have a surplus nor shortage; but the income earned by the farmers will be less than that of a price floor scheme.
CHAPTER 4:
PROBLEM # 37U:
P1 = $14; P2 = $16
Q1 = 6000; Q2 = 5600

  (a) Total Reevenue:
  (i) Before price change: TR1 = P1 x Q1
      = (14) x (6000) = $ 84,000
  (ii) After price change: TR2 = P2 x Q2
    = (16) x (5600) = $ 89,600
  (b) % change in price: [∆P/ avg. P] x 100 = [(16 – 14)/15] x 100 = 2/5 x 100 = 13.33%
  (c) % change in quanity: [∆Q/avg. Q] x 100 = [(5600 – 6000)/5800] x 100 = 400/5800 x 100 = 6.90%
  (d) ε = %∆ quantity /%∆ price = 6.90%/13.33% = 0.52
  (e) Demand is...