Microeconomics_Tutorial 3.doc - Tutorial 3 1 The table sets...

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Tutorial 3 1. The table sets out the demand and supply schedule for chips. 2. For each question, draw a market in equilibrium, labeling the initial equilibrium price and equilibrium quantity. Then shift the appropriate curve and label the new equilibrium price and equilibrium quantity. Next, describe what happened. a) Subsidies to producers of this good increase: b) What will happen if there is an increase in the number of buyers of this good at the same time that subsidies to producers of this good decrease, and demand and supply shift by equal amounts? c) What will happen if there is an increase in income and this is an inferior good and, at the same time, subsidies to producers rise, and demand and supply shift by equal amounts? 3. Price is $10, quantity supplied is 50 units, and quantity demanded is 100 units. For every $1 rise in price, quantity supplied rises by 5 units and quantity demanded falls by 5 units. What is the equilibrium price and quantity?
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