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ECON ASSIGNMENT 1

# ECON ASSIGNMENT 1 - SEP-OB-ZOOB 18:26 P CARLETON UNIVERSITY...

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Unformatted text preview: SEP-OB-ZOOB 18:26 P. CARLETON UNIVERSITY Department of Economics EconomﬁcleOO Tutorial Assignment 1 - GROUPS 1,35,73,11 1. Carleton University has a theft problem. Bicycles and stereo equipment have been stolen from many campus locatio e. To reduce the extent of the problem, the campus police have hired 5 new officers. The table below gives the expected number of thefts for different ways of assigning the 5 new officers. New officers Reduction in .New officers Reductions assigned to bike thefts assigned to y in theft bicycle duty residence patrol of stereos 1 25 1 10 2 45 2 18 3 60 3 25 4 70 4 31 5 75 5 36 [CD (a) Plot the production possibilities curve for theft reduction. Be sure to label axes carefully. I (S (b) Describe the opportunity costs involved in assigning the 5 new officers. Your opportunity cost answer should refer to points in the PPC diagram. 2. The demand curve for beer is P=100*0.02Q (P is in cents per bottle). NOTE: I In this equatiOn, 100 means 100 cents and 0.02 means 0.02 cents. IC) (a) Draw the demand curve for beer. C;' (b) If P= 20 cents, compute quantity demanded and elasticity ~- of demand at this price. q;; (c) If P= 50 cents, compute quantity demanded and elasticity of demand at this price. ?;-(d) Compute arc elasticity for the segment of the demand ' curve between P= 20 cents and P2 50 cents. 01 SEP-OB-ZOOB 18:26 P.02 3. The demand and supply schedules for bricks are shown in the table below. ' DEMAND ' SUPPLY W, _ Price Quantity Price Quantity \$2.00 50,000 \$2.00 200,000 \$1.50 70,000 \$1.50 150,000 \$9.60 100,000 \$l.6b 100,000 \$0.75 150,000 \$0.75 50,000 \$0.50 250,000 \$0.50 0 ¢; (a) Find the equilibrium price and quantity. a: (b) What would happen if the price was set at \$1.50? Is there a surplus or shortage? -What will happen to price? Why? &; (c) If the price is \$0.75, is this market in equilibrium? Is there a surplus or shortage? What will happen to price? Why? F; (a) What is the elasticity of demand at P= \$2.00? C;(e) What is the elasticity of supply at P= \$2.00? 4. In the market for audio cassettes, the demand and supply equations are: Demand: Qd = 60—2P Supply: Qs = 10+3P é: (a) Plot the demand curve. {; (b) Plot the supply curve. f; (c) Solve algebraically for eguilibrium price and quantity. Confirm that thlS answer is cons1stent Wlth a diagram in which demand and supply are plotted together. 4: (d) Calculate the price elasticity of demand at the equilibrium price. €;'(e) Show in your diagram the result of a law prohibiting the sale of cassettes at prices above \$5. What would be the impact of this legal price control? ' TOTAL P.02 ...
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ECON ASSIGNMENT 1 - SEP-OB-ZOOB 18:26 P CARLETON UNIVERSITY...

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