1. Consider the market for watermelon in this small island nation. The domestic demand curve is:
P = 58 - 3QD and the domestic supply curve is P = 8 + 2QS.
a) What is the equilibrium price and quantity?
b) If the government, hoping to help the poor, imposes a price ceiling of $11.50, what will be the impact on the market?
2. List the relationship for the following pairs of goods
a) iPhone and Samsung mobile phones
b) Amazon kindles and eBooks
c) Soap and Shower Gel
3. The demand curve function is given as QD = 100 - 4P, calculate and discuss the price elasticity of demand when the price rises from $16 to $20
4. When the price of good X is $6 and the price of good Y is $4, the quantity demanded on good X is 800 and of good Y is 600. When the price of Y is $2 but the price of X remains at $6, the quantity demanded of Y is 800 and the quantity demanded of X is 550. Calculate the cross price elasticity of demand for the two goods and discuss whether good X and Y are complements, substitutes, or unrelated.
5. The income elasticity of demand for airplane tickets is estimated to be 0.56. If income was to rise by 6%, what effect would it have on the quantity of tickets demanded, holding all else equal?