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Econ 103 - Problem Set 1 2

This document outlines an economics homework assignment with 4 multi-part questions about supply and demand, market equilibrium, normal and inferior goods, and shifts in supply and demand curves.

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21 views2 pages

Econ 103 - Problem Set 1 2

This document outlines an economics homework assignment with 4 multi-part questions about supply and demand, market equilibrium, normal and inferior goods, and shifts in supply and demand curves.

Uploaded by

yeetmyfeet645
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Economics 103

Fall 2023
Take Home Problem Set #1

Directions: Please submit your answers to the following questions on the canvas page before
4:00pm on September 25th or at the start of class. We will go over these questions before the
exam.

1. The following are the assumed supply and demand schedules for hamburgers in Collegetown:
Demand Schedule Supply Schedule
Price Quantity Demanded Price Quantity Supplied
2.75 14 2.75 32
2.50 18 2.50 30
2.25 22 2.25 28
2.00 26 2.00 26
1.75 30 1.75 24
1.50 34 1.50 22
a. Plot the supply and demand curves and indicate the equilibrium price and quantity.
b. What effect would a decrease in the price of beef, a hamburger input, have on the
equilibrium price and quantity of hamburgers, assuming all other things remained
constant? Include a diagram in your answer.
c. What effect would an increase in the prize of pizza, a substitute commodity, have on the
equilibrium price and quantity of hamburgers, assuming again that all other things remain
constant? Include a diagram in your answer.

2. The following table summarizes information about the market for principles of economics
textbooks:
Price Quantity Demanded Quantity Supplied
45 4.300 300
55 2.300 700
65 1.300 1,300
75 800 2,100
85 650 3,100
a. What is the market equilibrium price and quantity of textbooks?
b. To quell outrage over tuition increase, the college places a $55 limit on the price of
textbooks. How many textbooks will be sold now? What issue does this create?
c. While the price limit is still in effect automated publishing increases the efficiency of
textbook production. Show graphically the likely effect of this innovation on the market
price and quantity. (Numbers don’t matter, just want to know the direction of the shift)

3. Which of the following items are likely to be normal goods for a typical consumer? Which are
likely to be inferior goods?
a. Expensive perfume
b. Paper plates
c. Secondhand clothing
d. Overseas trips

4. The demand and supply curves for T-shirts in Touristtown, U.S.A., are given by the following
equations:
Q = 24,000 – 500P, & Q = 6,000 + 1,000P
Where P is measured in dollars and Q is the number of T-shirts sold per year.
a. Find the equilibrium price and quantity algebraically.
b. If tourists decide they de not really like T-shirts that much, which of the following might
be the new demand curve?
Q = 21,000 – 500P, or Q = 27,000 – 500P
Find the equilibrium price and quantity after the shift of the demand curve.
c. If, instead, two new stores that sell T-shirts open in town, which of the following might
be the new supply curve?
Q = 4,000 – 1,000P, or Q = 9,000 + 1,000 P
Find the equilibrium price and quantity after the shift of the demand curve.

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