ECON 162B A0, A1
Kenny Christianson
Fall 2010
due:
October 8
PROBLEM SET NUMBER THREE
1.
Find an article from the New York Times
, Wall Street Journal
, the internet, or another
publication concerning a particular change in price or quantity in a specific market.
Using a supply and demand graph, show the effects on the market that the article is
discussing.
Please hand in a copy of the article with your problem set.
2.
Suppose that the market for bananas in Binghamton on an average weekday is given
by the following equations:
demand:
P = 72 – 3Q
supply:
P = 12 + 2Q
where P is the price of a bushel in dollars and Q is quantity in bushels.
a. What is the equilibrium price and quantity?
Show graphically.
b. Assume that the National Institutes of Health issues a study showing that
bananas reduce the risk of cancer. The demand for bananas increases
to:
demand’:
P = 108  4Q
At the original equilibrium price, is there a shortage or a surplus?
Of how
much?
c. What is the new equilibrium price and quantity?
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 Spring '05
 Christianson
 Supply And Demand, agricultural price subsidies

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