Problem Set 2

# Problem Set 2 - b Demand would decrease c Quantity demanded...

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John (J.C.) Stevens EC205L- Section 216 Problem Set #2 This problem set is due at the beginning of class on 2/10/2005. You may work with one other person. You should work only with that partner—that means two groups should not get together and work as a team of four. Please answer all questions to the best of your ability. It is possible to earn partial points, so do the best you can. Consider a market for laptop computers that has the following demand schedule Price Quantity Demanded Quantity Supplied \$400 2000 0 \$600 1500 100 \$800 1000 500 \$1000 750 750 \$1200 500 1000 \$2000 100 2000 \$5000 0 5000 1. Draw a graphical representation of this market on the provided axis 2. What is the price at the equilibrium point? a. \$400 b. The market is not in equilibrium c. \$1,000 d. \$1,100 3. Suppose the price of a desktop computer was to fall sharply, what would happen in the laptop computer market? a. Demand would increase

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John (J.C.) Stevens EC205L- Section 216
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Unformatted text preview: b. Demand would decrease c. Quantity demanded would increase d. Quantity demanded would decrease 4. Show the effect of the change in desktop prices on the graph above (be sure to label your change). 5. Suppose NC State decides to close all the computer labs on campus, and imposes a new policy requiring all students to have a laptop computer. Since they realize that laptops can be fairly expensive, they decide that manufacturers cannot sell NC State students a computer for more than \$600. How is the market affected? Is the outcome favorable? 1. A price ceiling that has favorable effects for society 2. A price ceiling that has unfavorable effects on society. 3. A price floor that has favorable effects for society 4. A price floor that has unfavorable effects for society. 6. Please label this affect on the graph from part A....
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## This homework help was uploaded on 04/02/2008 for the course EC 205 taught by Professor Hymen during the Spring '08 term at N.C. State.

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Problem Set 2 - b Demand would decrease c Quantity demanded...

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