This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: SEPOBZOOB 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 SEPOBZOOB 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 ...
View
Full Document
 Spring '10
 SMITH

Click to edit the document details