eco301HW - Hunter College-CUNY Dept. of Economics Fall 2009...

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Hunter College-CUNY Dept. of Economics Fall 2009 Prof. Treffeisen Eco 301 First Problem Set- due Thursday, September 24, 2009 Chapter 1 1. Here is an easy review problem from microeconomics, just to make sure you are comfortable working with the basic model of supply and demand. Suppose the demand for portable DVD players can be described by the equation Q = 900 –  5P,  and supply by the equation Q = 100 + 5P, where Q is quantity in thousands and P is price in  dollars. a. Determine the equilibrium price and quantity. Show this on a graph. (Remember that the  convention in economics is to put price on the Y-axis, even though it generally makes  more sense to think of quantity as the dependent variable.) b. Suppose the price is set by law at $60. Determine whether there is a shortage or a  surplus of the product, and how much.  c. The above analysis assumed that income remained constant. Suppose that these DVD  players are a normal good, meaning that if consumers have more income, they will buy  more. Explain, without giving specific numbers, what will happen to the supply and  demand curves if income increases, and what the impact on the equilibrium price and  quantity will be.
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Chapter 2 2. There are a number of measures in macroeconomics that could be loosely called 
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This note was uploaded on 03/02/2010 for the course ECON 633 taught by Professor Guild during the Spring '10 term at Aarhus Universitet.

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eco301HW - Hunter College-CUNY Dept. of Economics Fall 2009...

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