Econ Homework#1 621 Due Monday Dept 19 (a warm-up homework assignment!) SHOW AND EXPLAIN ALL WORK AT A GRADUATE COLLEGE LEVEL! 1) What is the equilibrium price and quantity for a market with a demand curve S Q D = 10 - P and a supply curve equal to Q = 1 2 P - 2 .
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a) Do this problem using algebra. b) Do this problem graphically (using either graph paper or a computer).
2) What is the equilibrium price and quantity for a market with a demand curve S Q D = 10 - P and a supply curve equal to Q = 1 2 P - 2 and a tax imposed on the seller of $2 per unit?
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a) Do this problem using algebra. b) Do this problem graphically (using either graph paper or a computer). c) How much money the government will raise. 3) What is the equilibrium buyers price ( P b )for a market with a demand curve Q D = a - bP and a supply curve equal to Q S = c + dP and a per-unity tax imposed on the seller of t? a) Do this problem using algebra. b) What is dP b ? dt
4) A production possibilities frontier (PPF) function has the equation y = 36-x2 where y is salmon (per-pound) and x is housing (per square yard). a) Graph this function b) Using calculus, derive the opportunity cost of housing when the number of housing yards currently being consumed is 2. 1
5) For the following 6 examples show, using shifting demand and/or supply curves, what will happen in this market and state what will happen to price and quantity.
P/unit S0
P0
E0
D0
Q0
Q (units)
Example 1. The above market is for apple juice in the United States in 2005. In this year there was huge freeze in Florida that killed 50% of the U.S. orange crop (without affecting the apple crop). What will happen?
P/unit
S0
P0
E0
D0
Q0
Q (units)
Example 2. The above market is for apple juice in the States United in 2005. In this year there was an article in the New England Journal of Medicine that excessive drinking of apple juice caused impotence. What will happen?
2
P/unit
S0
P0
E0
D0
Q0
Q (units)
Example 3. The above market is for apple juice in the United States in 2005. In this year there was a tremendous increase in bees in apple growing regions that helped produce a bumper apple crop. What will happen?
P/unit
S0
P0
E0
D0
Q0
Q (units)
Example 4. The above market is for apple juice in the United States in 2005. In this year there was a strike among apple growers, protesting Congressional action that took away apple subsidies, and the producers let 30% of the apple harvest drop. What will happen?
3
P/unit
S0
P0
E0
D0
Q0
Q (units)
Example 5. The above market is for red wine in the in the United States in 2005. In this year there was a study at the University of California at Davis that consumption of one glass of red wine a day will decrease your chance of a heat attack by 47%. Red wine producers met and ca...