ECON 2302
HOMEWORK PROBLEMS
FOR PART 2
The purpose of doing
these problems is to increase your understanding of the material. It will help
you on quizzes and exams. You do not have to turn in this work. I will not go
over these problems specifically in class. Read the assigned chapters and come
to class. Check on the completed work which is on reserve in the SCC library.
After doing that, if you still have difficulties, come to see me during my
office hours.
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Dr. Cohick
1. In the table below, there are several factors which could be the cause of a shift in either the supply curve or the demand curve. As a result of a shift, there will be a new equilibrium price and a new equilibrium quantity. For each factor, identify whether demand or supply shifts, whether the shift is an increase or a decrease, and at the new equilibrium, is price higher or lower and is quantity higher or lower.
|
Factor |
Demand |
Supply |
Equilibrium Price |
Equilibrium Quantity |
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Price of a substitute rises |
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Price of a complement falls |
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Consumers’ income rises |
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Price of a resource input rises |
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New technology is adopted |
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Number of buyers increase |
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Number of sellers decrease |
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Buyers expect prices to rise tomorrow |
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A tax is imposed on the producers |
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Consumers increase their preference for the good |
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Production equipment becomes obsolete |
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2. Draw four market models in the space below. On the first, shift demand to the right. On the second, shift demand to the left. On the third, shift supply to the right. On the fourth, shift supply to the left. Below each one, identify the change in price and the change in quantity after equilibrium is reestablished.
(1) (2) (3) (4)
3. Use the data in this table to answer the questions below:
|
Price |
Quantity demanded |
Quantity supplied |
|
$10 |
60 |
180 |
|
$8 |
100 |
100 |
|
$6 |
180 |
60 |
a. What price will the good sell for if the price ceiling is $10? ___________________
b. What price will the good sell for if the price ceiling is $6? ____________________
c. How many will be bought and sold if the price ceiling is $10? _________________
d. How many will be bought and sold if the price ceiling is $6 ___________________
e. What price will the good sell for if the price floor is $10? _____________________
f. What price will the good sell for if the price floor is $6? ______________________
g. How many will be bought and sold if the price floor is $10? ___________________
h. How many will be bought and sold if the price floor is $6 _____________________
4. Draw a market model for the illegal black market for marijuana. Experts say “If marijuana is legalized, its price will fall.” Show on your market model how this could happen.
5. The price of gasoline rises. Which curve(s) must shift in order to cause this rising price?
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