Homework1 - Homework 1: Consumer Behavior (to be handed in...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework 1: Consumer Behavior (to be handed in on Thursday 29 th January 2004) 1. Drawing a supply and demand diagram in each case, illustrate the effect of the following on the market for apples. Make clear the direction in both price and quantity sold ( 1 point ): a) Scientists find that an apple a day does indeed keep the doctor away. b) The price of oranges triples c) A drought shrinks the apple crop to half its normal size d) Thousands of college students abandon the academic life to become apple pickers 2. Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows ( 1 point ): Price ($) Demand (millions) Supply (millions) 60 22 14 80 20 16 100 18 18 120 16 20 a) What are the equilibrium price and quantity? b) Calculate the price elasticity of demand when the price is $80. c) Calculate the price elasticity of supply when the price is $100 d) Suppose the government sets a price ceiling of $80. Will there be a shortage, and if so, how much? 3.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Homework1 - Homework 1: Consumer Behavior (to be handed in...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online