ECON191 problem set

ECON191 problem set - Econ 191 Spring 2010 Francis Lui...

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1 Econ 191 Spring 2010 Francis Lui Problem Set 1 Due: February 25, 2009, 2:50 pm SHARP. Your answers should be concise and to the point. Draw diagrams to illustrate your arguments whenever necessary . 1) Suppose that a quota is imposed on the import of Japanese cars to Hong Kong. Are car buyers in Japan better off or worse off? (Hints: Use simple supply and demand analysis. You may treat total demand for cars made in Japan as the sum of their demands in Hong Kong and elsewhere.) 2) (Bio-fuels.) Suppose that technologically it is possible to use certain food products, such as corns, beans or sugarcanes to manufacture alcohol, which in turn can be used as a substitute for petroleum. Assume that petroleum price goes up significantly, what will happen to the demand of alcohol? What will happen to the demand for the above food products? What will happen to the prices of these food products? Now assume that the above food products are also used to feed cows and pigs. After
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ECON191 problem set - Econ 191 Spring 2010 Francis Lui...

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