MarketsSU08a

MarketsSU08a - EC 1 UCLA Dr. Bresnock Summer Session A,...

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EC 1 Student Name: UCLA Dr. Bresnock Summer Session A, 2008 Markets Module Assignment Answers (50 points) Due: July 10 th (in class lecture) Please limit your answers to the spaces provided. If necessary, write on the back of the page. Do not attach printout or additional pages. All questions pertain to the Markets module in the SimEcon ® software package. Make sure you have read the “ Markets Manual” which may be found at the ClassWeb site prior to beginning the assignment. For many of the assignment's questions, it will be necessary to refer to those instructions. For many of the assignment's questions, it will be necessary to refer to your text. Please use this website to obtain the module: http://128.97.186.84/ Make sure that you have read the “ Markets Manual ” which may be found on the Class Web site in the SimEcon® section prior to beginning the exercise. For many of the exercise’s questions, it will be necessary to refer to those instructions. For many of the exercise’s questions, it will be necessary to refer to your text. To begin the exercise, launch the Markets module and note the "original conditions" which are the beginning values for each supply and demand variable. Write these values down for future reference. Now, click on "Continue". Write down the initial equilibrium values for the price, P E , and quantity, Q E , of wheat. Now select "Disturb the Market". (1) When the price of butter is increased from $4 to $8 per pound, the Demand (supply, demand) for wheat Decreases (increases, decreases, stays the same). Why? Butter and wheat are complementary goods. If the price of butter goes up the demand for wheat will fall and vice versa. (2) When the price of butter is increased from $4 to $8 per pound, the Quantity Supplied (quantity supplied, quantity demanded) for wheat Decreased (increased, decreased, stayed the same), as the Demand (supply, demand) shifted Left (left, right). (3)
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MarketsSU08a - EC 1 UCLA Dr. Bresnock Summer Session A,...

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