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M607-W10-Assignment1 - MSci 607 Applied Economics for...

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MSci 607 Applied Economics for Management Winter 2010 Assignment 1 Due Date: Jan 27 th , in class Question 1: For each sentence below describing changes in the tangerine market, note whether the statement is true, false, or uncertain, and explain your answer by drawing a graph for each case. a. If consumer income increases and worker wages fall, quantity will rise and prices will fall. b. If orange prices decrease and taxes on citrus fruits decrease, quantity will fall and prices will rise. c. If the price of canning machinery (a complement) increases and the growing season is unusually cold, quantity and price will both fall. Question 2: Suppose the market supply curve of wagons is Q S = 62.5 + 0.5 p 2 and the demand curve is Q D = 325 2 p 2 . Determine the incidence of a small tax on consumers. Question 3: Suppose Carmela’s income is $100 per week, which she allocates between sandwiches and books. Sandwiches cost $2 each. Books cost $10 each if she purchases between 1 and 5 books. If
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