# HW2 - Situation Supply curve shifts Demand curve shifts...

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Problem Set #2 1. Consider the market for laptop computers. In each of the following situations, determine whether there is a change in supply, or a change in demand, and in which direction. Indicate also what happens to the equilibrium quantity and price. It may help to sketch on the graphs below. As an example, the first one is done. a. laptop computers become seen as geeky and unfashionable. b. consumer income rises (assume laptop computers are a normal good) c. The price of semiconductors falls d. A new processor increases the processing speed of laptops, but costs more to produce. e. the cost of computer software rises f. the cost of desktop computers rises

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Unformatted text preview: Situation Supply curve shifts? Demand curve shifts? Equilibrium quantity ? Price? a no left falls falls b c d e f Quantity Price D S Quantity Price D S Quantity Price D S Quantity Price D S Quantity Price D S Quantity Price D S 3. Suppose that the supply and demand equations are given by the equations below: Demand: Q d = 16 – 2P Supply: Q s = -8 + 2P A. Find the equilibrium price and quantity. B. Suppose that there is an increase in income. After the change the demand curve is given by Q d = 20 – 2P. Find the new equilibrium price and quantity. C. What does the change in demand tell us about the good?...
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