# Individual Assignment 2.docx - SolBridge International...

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SolBridge International School of BusinessBUS 509: Business Economics – Spring 2018Dr. Alemu Aye MengistuINDIVIDUAL ASSIGNMENT 2NAME: Truong Khang (Mike)STUDENT NUMBER: 201805007Daejeon, 2ndApril 2018
ASSIGNMENT 21QUESTION 1In terms of the quantity demanded, we haveP = 1000 – 2QIfP = 0, then 0 = 1000 – 2Q=> 2Q = 1000=> Q = 500IfQ = 0, then P = 1000In terms of the quantity supplied, we haveP = 200 + 6QIfP = 0, then 0 = 200 + 6Q=> 6Q = -200=> Q = -33.33IfQ = 0, then P = 200From the above calculations, we can draw the graph as follows:Graph 1. The market of harmonica in WakandaPART A:Given the assumption, we have demand curveP = 1000 – 2Q(D) and supply curveP =200 + 6Q(S). At the equilibrium point, we havePD=PSandQD=QPriceQuantity500-33.331000200CPSS.
ASSIGNMENT 22Solve for Q1000 – 2Q= 200 + 6Q8Q= 800Q= 100Solve for PP= 1000 – 2 x 100P= 800To conclude,the equilibrium price is 800andthe equilibrium quantity is 100.PART B:According to the consumer surplus (CS) formula, we haveCS=0q(D(x)p)dx¿0100(10002Q800)dQ¿0100(2002Q)dQ¿(200QQ2)|0100¿20,00010,000¿10,000Given the information,consumer surpluscan be calculated to be10,000.PART C:According to the producer surplus (PS) formula, we havePS=0q(pS(x))dx
ASSIGNMENT 23¿0100(800−(200+6Q))dQ¿0100(6006Q)dQ¿(600Q3Q2)|0100¿60,00030,000¿30,000Given the information,producer surpluscan be calculated to be30,000.PART D:As the price floor employed for harmonica (Pf) islessthan the equilibrium price(\$500 < \$800), we can depict the market of harmonica incurring the price floor as follows:Graph 2. The market of harmonica in Wakanda after applying the price flooracPriQuantity500-33.331000200P*Q*bde
ASSIGNMENT 24The price floor is used by the government of Wakanda with the sole purpose of

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