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Q PX Py+9 PZ+ M

The document contains questions about supply and demand concepts including normal and inferior goods, the effects of income changes and price changes on demand, supply shifts from input price changes and taxes, supply and demand functions, equilibrium price and quantity, price floors and ceilings, consumer and producer surplus. Students are asked to analyze supply and demand scenarios, determine equilibrium outcomes, and graph functions to illustrate key economic relationships.

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Dane Matthew Pilapil
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57 views

Q PX Py+9 PZ+ M

The document contains questions about supply and demand concepts including normal and inferior goods, the effects of income changes and price changes on demand, supply shifts from input price changes and taxes, supply and demand functions, equilibrium price and quantity, price floors and ceilings, consumer and producer surplus. Students are asked to analyze supply and demand scenarios, determine equilibrium outcomes, and graph functions to illustrate key economic relationships.

Uploaded by

Dane Matthew Pilapil
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment: Module 2

Submit your output in the Discussion Board not later than August 28, 2021. (Answer all
questions.)

1. The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-
Corp. makes a substitute good that it markets under the name Y. Good Y is an inferior
good.
A. How will the demand for good X change if consumer incomes decrease?
B. How will the demand for good Y change if consumer incomes increase?
C. How will the demand for good X change if the price of good Y increases?

2. Good X is produced in a competitive market using input A. Explain what would happen
to the supply of good X in each of the following situations?
A. The price of input A decreases.
B. An excise tax of $3 is imposed on good X.
C. An ad valorem tax of 7% is imposed on good X.
D. A technological change reduces the cost of producing additional units of good X.

3. Suppose the supply function for product is given by Qs = -30 + 2Px -4Pz
A. How much of product X is produced when Px = $600 and Pz = $60?
B. How much of product X is produced when Px = $80 and Pz = $60?
C. Suppose Pz = $60. Determine the supply function and the inverse supply function for
good X. Graph the inverse supply function.

4. The demand for good X is given by


1 1
Q dx =6,000− Px−Py+ 9 Pz+ M
2 10

Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100
while the average income of individuals consuming this product is M = $70,000.
A. Indicate whether goods Y and Z are substitutes or complements for good X.
B. Is X an inferior or a normal good?
C. How many units of goods X will be purchased when Px = $5,230?
D. Determine the demand function and the inverse demand function for good X. Graph
the demand curve for good X.

5. The demand for product X is given by Qd = 300 – 2Px


A. Plot the inverse demand curve.
B. How much consumer surplus do consumers receive when Px = $45?

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C. How much consumer surplus do consumers receive when Px = $30?
D. In general, what happens to the level of consumer surplus as the price of a good
falls?
6. Suppose demand and supply are given by Qd = 60 – P and Qs = P − 20.
A. What are the equilibrium quantity and price in this market?
B. Determine quantity demanded, quantity supplied and the magnitude of the surplus
if a price floor of $50 is imposed in this market.
C. Determine quantity demanded, quantity supplied and the magnitude of the
shortage if a price ceiling of $32 is imposed in this market.

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