Assignment 3: Effects of Hurricane Katrina on Housing Demand | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

ASSIGNMENTS TOPIC 3: Exercise 1:
a. Explain the effects of Hurricane Katrina to demand for housing in Baton Rouge and to the price and
quantity of housing there. Use a graph to explain. b.
The need for housing rises as Baton Rouge's population grows, moving the demand curve to the right.
From $130,000 (point a), the equilibrium price rose to $156,000 (point b). Levee breaks and a storm
surge caused by Hurricane Katrina caused most of New Orleans to be flooded and severely damaged,
displacing 250,000 residents to the nearby city of Baton Rouge. This is a non-price element that
accelerated the town's population expansion, straining the available supply and driving up the price. A
house will become more expensive as a result. ( The supply curve has moved to the right ). b.
Half of people who relocated to Baton Rouge five years after Hurricane Katrina went back to a rebuilt New
Orleans. Demand for goods has decreased along with the population. The price of housing has reduced as a
result. (Relative to the previous curve, the demand curve has shifted to the right.) Exercise 2:
The quantity of ice cream sold on the market has decreased due to the decline in the bee population
(strawberries, raspberries, berries, and nuts). As a result, the cost of those ingredients rises, raising the cost
of creating ice cream. As a result, ice cream costs more money. Exercise 3:
a. Q1 = 1, Q = 3 => %∆Q = = = 2. 2 P = $10, P 1 = $5 => %∆P 2 = = = = 0,5. E d
p = = = 4 > 1 => elastic.
b. With the promotional vouchers, the Binh’s monthly expenditure on meals at this restaurant
increases from 1 meal per month to 3 meals per month.