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Assignment 2

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tathuytrang18052006
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2 views

Assignment 2

Uploaded by

tathuytrang18052006
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ex1

Price ($/unit) 100 120 140 160 180 200


Quantity Demanded (units) 1000 900 800 700 600 500
Quantity supplied (units) 300 400 500 600 700 800
1200

1000 1000
900
800 800 800
Quantity (units)

700 700
600 600 600
500 500
400 400
300
200

0
100 120 140 160 180 200
Price($/unit)

Quantity Demanded (units) Quantity supplied (units)

1.- Demand equation: Qd=f(P); P=a-bQd


+ at P=100 => Qd=1000 =>100=a-b.1000 (1)
+ at P=120 => Qd=900 =>120=a-b.900 (2)
+From (1) and (2) =>a=300, b=0.2
=>P=300-0.2Qd
-Supply equation: Qs=f(P); P=c+dQs
+ at P=100 => Qs=300 =>100=c+d.300 (1)
+ at P=120 => Qs=400 =>120=c+d.400 (2)
+From (1) and (2) =>c=40, d=0.2
=>P=40+0.2Qs
Equilibrium price and equilibrium quantity for fridge can be seen at point E where
Pe = Qe
Qe=Qs=Qd =>300-0.2Qe = 40+0.2Qe
=> Qe=650(units), Pe=170(units)
2. -At the price of $200, the surplus of the fridge :800-500=300(units)
-At the price of $110, the shortage of the fridge:
+At this price, the Qd=950 (units) and Qs=350 (units)
=>the shortage is 950-350=600 (units)
3. – If the price of electricity increases and the supply of a fridge is constant, the
demand for the fridge will decrease. Electricity is a non-price factor and it cause
the shift of the curve to the left.
- The quantity demanded for fridge change 300 units at each price level:
+Situation 1: there is an increase of 300 units in demand for fridge at each level of
price, the new equilibrium price and new equilibrium quantity are:
at P=100 => Qd=1300 =>100=a-b.1300 (1)
at P=120 => Qd=1200 =>120=a-b.1200 (2)
From (1) and (2) =>a=360, b=0.2
Qe(new)=Qs=Qd(new) =>360-0.2Qe = 40+0.2Qe
=> Qe(new)=800(units), Pe(new)=200($/units)
+Situation 2: there is a decrease of 300 units in demand for fridge at each level of
price, the new equilibrium price and new equilibrium quantity are:
at P=100 => Qd=700 =>100=a-b.700 (1)
at P=120 => Qd=600 =>120=a-b.600 (2)
From (1) and (2) =>a=240, b=0.2
Qe(new)=Qs=Qd(new) =>240-0.2Qe = 40+0.2Qe
=> Qe(new)=500(units), Pe(new)=140($/units)
4. -If government imposes a tax of $ 10 per one units of fridge sold, the demand is
constant. Therefore, the new supply function is P=50+0.2Qs
-The new equilibrium price and new equilibrium quantity for fridge are:
Qd=Qs=Qe =>50+0.2Qe=300-0.2Qe
=>Qe=625 (units), Pe=175 ($/units)
5. -If government supports for the sellers the amount of $ 10 per one units of fridge
sold, the demand is constant. Therefore, the new supply function is P=30+0.2Qs
-The new equilibrium price and new equilibrium quantity for fridge are:
Qd=Qs=Qe =>30+0.2Qe=300-0.2Qe
=>Qe=675 (units), Pe=165 ($/units)

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