Demand & Supply Analysis Exercise 1 & 2 | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

INDIVIDUAL ASSIGNMENT Name: Nguyen Phuong Oanh Class: E-BBA 14.1
Exercise 1: Demand and supply of fridge are shown in the table below: Price($/unit) 100 120 140 160 18 20 0 0 Quantity 100 900 800 700 60 50 Demanded 0 0 0 (units) Quantity 300 400 500 600 70 80 supplied 0 0 (units) Chart Title 1200 1000 800 600 400 200 0 100 120 140 160 180 200 Quantity Demanded (units) Quantity supplied (units) a. - Demand equation: Qd=a+bP
We have: + When P=0, Qd= 1500 => a=1500 + b=
Qd / P = (1000-900)/(100-120)= -5 Demand equation: Qd= 1500-5P - Supply equation: Qs=a+bP
We have: + When P=0, Qs= -200 => a=-200 + b=
Qs / P = (300-400)/(100-120)= 5 Supply equation: Qs= 5P-200
- Equilibrium price: PE= 300-0.2Qd = 40 + 0.2Qs
Addly, Qd = Qs => Equilibrium quantity: QE = Qd = Qs = 650 units PE= 170 $/unit b.
- The surplus of fridge at the price of $ 200 is 800 - 500= 300 units
- The shortage of fridge at the price of $ 110 is 950 - 350= 600 units
c. - Suppose the supply of fridge is constant, if price of
electricity increases, the demand for refrigerators will tend to decrease.
- Given that quantity demanded for fridge change 300 units at each price level:
+ In case Quantity Demanded decrease 300 units at each price level: Price($/unit) 100 120 140 160 180 200 Quantity 700 600 500 400 300 200 Demanded (units) Quantity 300 400 500 600 700 800 supplied (units) Chart Title 900 800 700 600 500 400 300 200 100 0 100 120 140 160 180 200 Quantity Demanded (units) 800
We have: Qd=1200-5P and Qs= -200+5P QE= Qd=Qs 1200 – 5P = -200+5P P= PE= 140 ($/unit)
QE = 1200 – 5x140= 500 (units)
+ In case Quantity Demanded decrease 300 units at each price level: Price($/unit) 100 120 140 160 180 200 Quantity 1300 1200 1100 1000 900 800 Demanded (units) Quantity supplied 300 400 500 600 700 800 (units) Chart Title 1400 1200 1000 800 600 400 200 0 100 120 140 160 180 200 Quantity Demanded (units) Series 3
PE= 200 ($/unit) ; QE= 800 (units)
d. Suppose government imposes a tax of $ 10 per one units of
fridge sold, what are new equilibrium price and new
equilibrium quantity for fridge? Price($/unit) 110 130 150 170 190 210 Quantity 1000 900 800 700 600 500 Demanded (units) Quantity supplied 300 400 500 600 700 800 (units) Chart Title 1200 1000 800 600 400 200 0110 130 150 170 190 210 Quantity Demanded (units) Series 3
QD=1550 – 5P and QS= -250 +5P
QE=QD=QS => 1550-5P=-250+5P => PE=P= 180($/unit) => QE= 650 (units)
e. Suppose government supports for the sellers the amount of $
10 per one units of fridge sold, what are new equilibrium price
and new equilibrium quantity for fridge? Price($/unit) 90 110 130 150 170 190 Quantity 1000 900 800 700 600 500 Demanded (units) Quantity 300 400 500 600 700 800 supplied (units) Chart Title 1200 1000 800 600 400 200 090 110 130 150 170 190 Quantity Demanded (units) Series 3
QD=1450 – 5P and QS= -150 +5P
QE=QD=QS => 1450-5P=-150+5P => PE=P= 160($/unit) => QE= 650 (units)
EXERCISE 2: With the aid of diagrams, show how each of the
following events affects the supply and/or demand curve for
motor cycles. In each case, show and state the effect on the
equilibrium price and quantity. cycle will decrease because the customers have less money than they used to.
a. An increase in Vietnamese personal income tax rates P S E PE E’ PE’’ QE’ Q D E D’ Q
- Their demand of motor cycle will decrease because the
customers have less money than they used to. They must
make a choice and only buy things they really need.
- Effect of the increase of Vietnamese income tax rates cause
the shift of the D. In this case, the equilibrium price and
quantity will be shifted to the lefthand side of the old
equilibrium price and quantity.
b. An increase in the price of steel
- The supply of motor cycle will decrease because the price of
input resources rises. The manufacturers will reduce the amount
of motor cycle producers to stay their profit.
- Effect of the increase of price of steel cause the shift of the S
curve to the left. In this case, the equilibrium price and
quantity will be shifted to the lefthand side of the old
equilibrium price and quantity.
c. An improvement in technology in motor vehicle production at
the same time as a recession hits the Vietnamese economy. P D S D’ S’ PE’ E PE E’ QE’ QE
- An improvement in technology in motor vehicle production
helps the supply of motor vehicle production increase so the
price will fall. While at the same time, a recession hits the
Vietnamese economy make the demand fall and the price will drop even further.
- Effect of this double event cause the shift of the S curve and
the shift of the D curve to the left. In this case, the
equilibrium price and quantity will be shifted to the righthand
side of the old equilibrium price and quantity.