Practice Quiz 1 - Practice Quiz 1 ECO304L Norman Given the...

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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 __ Work Space ...
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