Microeconomic Analysis practice questions: 1) The manufactured...

Microeconomic Analysis practice questions:

1) The manufactured suggested retail price, reflecting the current market price is $94.50 for consumer product A. The marketing retail manager for product A recently received an internal study which empirically determined the market demand for product A is Q_D = 475 - 1.5P and its market supply curve is Q_S = -215 + 2.5P. How would you describe this situation, what would you expect to happen in this market?

2) According to the New York Times (November 18, 2006), the number of car producers in China is increasing rapidly. The newspaper reports "China has more car brands now than the United States... But while car sales have climbed 38 percent in the first three quarters of 2006, auto producers have increased their output even faster, causing fierce competition and a slow erosion in car prices." Use market equilibrium analysis to diagram and explain what has happened in the Chinese car market.

3) The following relations describe monthly demand and supply for a computer support service catering to small businesses Qd = 3000-10P and Qs= -1000+10P; where Q is the number of businesses that need services and P is the monthly fee in dollars. Compute the equilibrium price and output level.

4) The following relations describe monthly demand and supply for a computer support service catering to small businesses Qd = 3000-10P and Qs= -1000+10P; where Q is the number of businesses that need services and P is the monthly fee in dollars. Compute the equilibrium price and output level. Assume a new demand curve: Qd = 2500-10P. Compute and upload to Dropbox a diagram showing the new equilibrium price and quantity and determine its effect on supply.