Principles of Microeconomics (7th Edition) (Case/Fair Economics 7e Series)

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Economics 2302 Principles of Microeconomics Professor McFarlin University of Texas at Dallas Problem Set 3 [Note: Problem sets in this class will not be collected or graded.] 1. Suppose that the demand schedule for a particular product may be written as P = 100 – Q d , and that the supply schedule for that product is given by P = 20 + Q s . What are the equilibrium price and quantity in this market? Graph your answer, labeling equilibrium point and vertical and horizontal intercepts. 2. Use separate supply and demand diagrams to predict the consequences for equilibrium price and quantity in each of the following markets. Be sure to specify any assumptions you make in your analysis. a. the market for movie tickets, when the price of video rentals falls. b. the market for Palm Pilots, when a robust economy causes consumer incomes to rise. c. the market for beef in Europe, when CNN runs a special on “mad cow” disease. d. the market for overnight delivery services (e.g., FedEx), when the price of gasoline rises. e. the market for PCs, when colleges begin requiring freshmen to arrive with PCs and when the price of computer chips falls.
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