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micro_problem_set1

# micro_problem_set1 - 4d There would be a shortage in supply...

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1) The opportunity cost of buying the house will mean that she loses the 4% interest, \$8,000, and the \$3,000 annual cost. The total value comes out to \$11,000. If she chooses to rent then she loses \$12,000 per year. Buying the house is a good deal for the tenant because she will lose \$11,000 per year as opposed to \$12,000. 2)* 3a) 5 wristbands 3b) 6 wristbands 3c) Kristen 4a)* 2a) 1,500 pizzas each year. 2b) 30 ovens each year.

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4b) \$4 4c) There would be a surplus in supply causing prices to decrease.
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Unformatted text preview: 4d) There would be a shortage in supply. People will be willing to pay more causing the prices to increase. 5a) P Q S D D1 The demand for hot dogs shifts to the left causing price and quantity to decrease. Q* Q*1 P* P*1 5b) *For the graphs: "Create a Graph." Nces.Ed.Gov . 10 Feb. 2008 <http://nces.ed.gov/nceskids/createagraph/default.aspx>. P Q D S Demand for hot dogs shift to the right causing price and quantity to increase. D1 Q* Q*1 P* P*1...
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