asmt1_fall2010_sol

# asmt1_fall2010_sol - University of Victoria Economics 203...

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University of Victoria September 17, 2010 Economics 203 Assignment #1 Solutions Due: Monday, October 4 , 2010 , @ 12 noon. (In the boxes marked A ECON 203" near the Economics Department Office) Show all your work. Put your LAB section on your assignment . Questions from Chapter 1: 1) Review #5, page 25. ( 2 marks ) 2) Problems 1 ( 3 marks ), 7 ( 2 marks ), 11 ( 3 marks ), and 12 ( 3 marks ), page 26- 27. Questions from Chapter 2 : 1) Review #1 ( 2 Marks ) and #5 (4 marks), page 53. (V4 p. 49-50.) 2) Problems 12 ( 5 marks ) and 18 ( 3 marks ), pages 55-56. 12) Using Diagrams, show what changes in equilibrium price and quantity exchanged would be expected in the following markets in the situations described: a) Crude oil: As petroleum reserves decrease, it becomes more difficult to find and recover crude oil. b) Air travel: Worries about air safety cause travellers to shy away from air travel. c) Rail Travel: Worries about air safety cause travellers to shy a away from air travel. d) Hotel rooms in Cuba: Worries about air safety cause travellers to shy away from air travel. e) Milk: A drop in hay prices enables milk producers to cut production costs. 18) Suppose the supply of a good is given by the equation P=Q and demand is fixed at Q=12 units per week, with P in dollars per unit. a) Find the equilibrium price and quantity. b) Suppose the government levies a tax equal to \$4 per unit on sellers of the good. Find the equilibrium quantity, price paid by buyers, and price received by the sellers (net of taxes). c)

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## This note was uploaded on 08/03/2011 for the course ECON 203 taught by Professor Okhan during the Spring '11 term at University of Victoria.

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asmt1_fall2010_sol - University of Victoria Economics 203...

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