h1 - (c) Now suppose that a freeze in Florida reduces...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 The Colorado College Department of Economics and Business Block 7 Econ 207 HW 1. 1. The following data represent 5 points on the supply and demand curve for orange juice: Price Quantity Demanded Quantity Supplied. 1 700 100 2 600 300 3 500 500 4 400 700 5 300 900 (a) Graph the points of these supply and demand curves for orange juice. Be sure to put price on the vertical axis and quantity on the horizontal axis. (b) Do these points seem to lie along two straight lines? (c) What is the excess demand for orange juice at P =$1. (d) What is the excess supply at P= $5. (e) What is the equilibrium price and the corresponding equilibrium quantity? (5x2 = 10 points) 2. Use the supply-demand schedule shown in question 1 above to answer this question. (a) Explain why P=$2 and P=$4 are not equilibrium prices. (b) Suppose the demand were to increase so that people want to buy 300 million more gallons at each price. How would that shift the demand curve? Graph it. What is the new equilibrium price and quantity?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (c) Now suppose that a freeze in Florida reduces orange juice supply by 300 million gallons at each price. Using your initial demand graphically show how it would affect the supply curve. What is the new equilibrium price and quantity? (2+4+4 = 10 points) 3. Consider the demand and supply function of the following form: Q d = -2P + 20 Q s = 2P 4. where Q s is the quantity supplied, Q d is the quantity demanded and P is the price. (a) Solve for the equilibrium price and quantity. Also graph the supply-demand equilibrium. (b) Now suppose at each price that individuals demand four more units of output and the demand curve shifts to Q / d = -2P + 24 Graph this situation and also calculate the new equilibrium price-quantity using the initial supply function. (c) Now, suppose the supply curve shifts to Q / s = 2P 8. 2 What is the new equilibrium price and quantity, using the new demand function? Graph the situation also. (2+4+4=10 points)...
View Full Document

Page1 / 2

h1 - (c) Now suppose that a freeze in Florida reduces...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online