Homework 1 - ECONOMICS 002 Name: _Frank Hernandez_ Fall...

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ECONOMICS 002 Name: _ Frank Hernandez ______________________ Fall Semester 2009 Homework Assignment 1 TA Time: _______________________________________ Due September 15, 2009, in class Please write your name, the TA’s name, and the meeting time of your recitation section on your homework. As room is provided for your answers, you can, if you would like, write your answers directly on these sheets after you print them. For multiple choice questions, circle the correct answer. 1. [25 points] Consider the market for used laptop computers represented by the table below. Price Quantity Demanded Quantity Supplied $100 1,000 100 $200 900 350 $300 500 500 $400 300 1,000 $500 100 1,200 a) What are the equilibrium price and quantity? $300 = equilibrium price. Equilibrium quantity is 500 units. b) At which prices are there shortages? At which prices are there surpluses? There are shortages at $100 and $200. There are surpluses at $400 and $500. c) Are the supply and demand curves straight lines? No. d) Suppose there is an increase in the supply of used laptops by 550 units at every price, while demand does not change. What are the new equilibrium price and quantity? (The process by which the market adjusts to the new equilibrium should be clear in your mind.) The new equilibrium price is $200. The new equilibrium quantity is 900 units. 2. [25 points] For each of the following markets indicate whether the stated change causes: (i) a shift in the supply curve or a movement along the supply curve; and (ii) a shift in the demand curve or a movement along the demand curve. a) The market for consumer durables (e.g., refrigerators and washing machines):
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This note was uploaded on 03/10/2010 for the course ECON 2 taught by Professor Taylor during the Fall '09 term at Georgetown KY.

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Homework 1 - ECONOMICS 002 Name: _Frank Hernandez_ Fall...

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