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problem 3

# problem 3 - ECON 162B A0 A1 Fall 2010 PROBLEM SET NUMBER...

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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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problem 3 - ECON 162B A0 A1 Fall 2010 PROBLEM SET NUMBER...

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