Assignment 1(1).docx - BU.220.620 Fall 1 2017 Economics for...

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BU.220.620 Fall 1 2017 Economics for Decision Professor: Magdalena Barreiro, Ph.d ASSIGNMENT No.1: BASICS OF SUPPLY, DEMAND AND ELASTICITY Upload one document per group to Blackboard. All group member’s names should be included 1. In a supply and demand diagram, draw the shift of the demand curve for hamburgers in your hometown due to the following events. In each case, show the effect on equilibrium price and quantity. a. The price of tacos increases. b. All hamburger sellers raise the price of their French fries. c. Income falls in town. Assume that hamburgers are a normal good for most people. d. Income falls in town. Assume that hamburgers are an inferior good for most people. e. Hot dog stands cut the price of hotdogs. 2. The market for many goods changes in predictable ways according to the time of year, in response to events such as holidays, vacation times, seasonal changes in production, and so on. Using supply and demand, explain the change in price in each of the following cases. Note that supply and demand may shift simultaneously. a. Lobster prices usually fall during the summer peak lobster harvest season, despite the fact that people like to eat lobster during the summer more than at any other time of year.

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