Unformatted text preview: Practice Quiz 1: ECO304L Norman Given the following market: D:70—5P
5:5P 1. What is the market equilibrium price and quantity?
Answers: P _______ Q _______ 2. Suppose the government gives each demander $2 for each unit purchased?
What is the new equilibrium quanity? How much does each supplier get and
how much does each demander pay from his own pocket? Answers: Q _______ P(demander) _______ Total to supplier _______ 3. What is the total amount of the government subsidy. Answers: Total Subsidy 4. Now consider this market as a dynamic adjustment:
Dt : 170 — 5B St I 5Pt
Pt+1 2 Pt — (1/10)(St — Dt) Suppose P1 : 15. Work out two rounds of the dynamics of this market. As
If —> 00 to what values will the market converge. Suppose the coefﬁcient (1/10)
were replaced by 1, would this market converge. Answers: P1 _______ D1 _______ 51 _______
P2 _______ D2 _______ 82 _______
P00 _______ D00 _______ Converge: Yes __ No __
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 Spring '08
 HIETMANN

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