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

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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.
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This note was uploaded on 01/04/2012 for the course ECON 101 taught by Professor Pr.makushi during the Spring '11 term at San Diego Christian.

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

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