1. Calclate:
a. the market equilibrium price and quantity for the market demand system:
i. p=98-3q
ii.p=18+2q
b. how much will be produced if price floor imposed at 60,
c. how much will be demanded by private consumers
d. how much excess supply will be there?
e. is this an equilibrium?
2. assume the demand curve shifted to P=118-3q. use a graph to describe how this demand curve differs from the one in problem one, separately describing:
a. changes in willingnes to pay, and
b. changes in the number of units people want to buy
3. calculate the new equilibrium price and quantity (using the demand curve from problem 2 and supply from problem 1).
a. does demand go up, down, or remain the same?
b. does supply go up, down, or remain the same?
c. does quantity supplied go up, down, or remain the same?
4. assume that demand and supply respectively are P= 160- Q and P=10. now let supply change to be equal to P=5
a. Calculate the change in price and quantity
b. in this a change in supply, demand, quantity supplied and/or quantity demanded? explain.
5. referring to the change in problem 4:
a. does the change in supply help or hurt society? why?
b. if factor prices are constant would it be fair to describe the change as "technological innovation"?
6. fully analyze the effects of the change in problem 4 on social welfare separately identifying (and quantifying):
a. effects on the cost of manufacturing, and
b. effects on quantity traded in the market.
7. calculate the market equilibrium price and quantity for the market demand system:
i. p=210-3q
ii.p=10 +2q
b. calculate consumer, producer, and total surplus
c. is consumer or producer surplus larger? why?