Econ 302 Homework 2 - Questions for Review 1. Scarcity...

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Questions for Review 1. Scarcity means that society has limited resources and cannot produce all the goods and services people wish to have. A shortage is when the quantity demanded exceeds quantity supplied. 2. If a good is not scarce, the supply curve and demand curve will not be affected by price and quantity. Since there is scarcity, the positive price tells how much value the suppliers and consumers put. Therefore, what quantity they will offer or demand at any given price is shown by demand and supply curve when there is scarcity. Problems 2. A. At $35 5=2Qs Qs= 17.5 35=42-Qd Qd= 7 7 units will be traded but suppliers will be dissatisfied because they did not sell all their goods. At $14 14=2Qs Qs= 7 14=42-Qd Qd=28 7 units will be traded but consumer will be dissatisfied because there is not enough supply to meet the demand. b . At equilibrium, Qs = Qd P = 42- P/2 P=28, Qs = Qd= 14 c. TR = Price*Quantity = 28*14 = $392 7. a.
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b. 50= 1900- (1/50) Qd Qd = (1900-50)/ (1/50) = 92,500 Qs-Qd = 90,000- 92,500 = -2,500 2,500 consumers will be dissatisfied c. 50 = 2100 – (1/50) Qd Qd = (2100-50)/(1/50) = 102,500
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This note was uploaded on 10/12/2008 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.

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Econ 302 Homework 2 - Questions for Review 1. Scarcity...

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