Group Assignment 2 on Demand & Supply | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

GROUP ASSIGNMENTS 2
Exercise 1. Demand and supply of fridge are shown in the table below: Price ($/unit) 100 120 140 160 180 200 Quantity Demanded (units) 1000 900 800 700 600 500 Quantity supplied (units) 300 400 500 600 700 800
1. What are the demand and supply equations, equilibrium
price and equilibrium quantity for fridge ?
The demand equation for fridge : P=a−b ×Qd ∆ P - =¿ =100 ∆ Q
constant, ∆ P=20,∆Qd d  20 1 b= ∆ P = = ∆ Q 100 5 d  1 100=a− × 1000 5  1
So, the demand equation for fridge is P=300− ×Q 5 d  1
Similarly, the supply equation for fridge is P = 100+ Q 5 s 1 Q 5 D
In equilibrium ¿>{P=300−1 P=100+ Q 5 S  Q =Q D S  P = 200 ; Q = 500
2. What are the surplus and shortage of fridge at the price of $200 and $110 ? =500
a. At the price of $ 200 ,{Qd Q =800 s  Q <Q d s
The surplus of fridge at price of 200$ is
∆ Q=Q −Q =800 500 300 − = ( units) s d =1500−5 ×110 950 =
b. At the price of $ 110 ,{QdQ =5×110 200 350 − = s  Q >Q d s
The shortage of fridge at the price of 110$ is
∆ Q=Q −Q =950 350 600 − = ( units) d s
3. Suppose the supply of fridge is constant, what happened for
demand for fridge if price of electricity increase? Given
that quantity demanded for fridge change 300 units at each
price level, what are new equilibrium price and new
equilibrium quantity for fridge?
- The supply of fridge is constant, the demand for fridge will
decrease if price of electricity increase.
- Given that quantity demanded for fridge change 300 units at
each price level, the new equilibrium price is $200 and the new
equilibrium quanity is 500 for fridge. −1 P = Q +300 5 D 1 P = Q +100 5 S
In equilibrium => Q =Q =Q D S −1 Q+300  {p= 5 => Q = 500 ; P = 200 1 P= Q+100 5
4. Suppose government imposes a tax of $ 10 per one units of
fridge sold, what are new equilibrium price and new equilibrium quantity for fridge?
- Suppose government imposes a tax of $ 10 per one units of fridge sold P = P =P−10 s + 10 => Ps 1
P =P−10= Q +100−10 s 5 s  1 Q +90 5 S
In equilibrium => Q =Q =Q s D −1 Q+300  {p= 5 => Q = 525 ; P = 105 1 p= Q +90 5
Conclusion, new equilibrium price is $105 and new equilibrium quantity is 525 for fridge.
5. 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?
- Government supports for the sellers the amount of $ 10 per one units of fridge sold Q =5 P−150 s
The new equilibrium: Q =Q s
D ¿>5 P −150=−5 P+1500
 10P = 1650 => P = 165 ; Q = 675
So the new equilibrium price is $165 and the new
equilibrium quantity is 675 for fridge.
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.
1. An increase in Vietnamese personal income tax rates
The demand quantity reduce => The demand curve shift
move to the left => The equilibrium price and the equilibrium are decline too. The diagram:
2. An increase in the price of steel
The steel prices increase => The input costs increase => The supply decrease. P S’ S PE’ PE D Q QE’ QE
According to the line graph, we infer that when the price of steel
increases, the equilibrium quantity decreases, the equilibrium price increases
3.Improve motorcycle manufacturing technology => The supply increase
Economic downturn => The demand increase We have 3 cases occurs:
Case 1: Supply increase more than demand decrease In this case, the quantity increase a equilibrium nd the equilibrium price decrease P S S’ PE PE’ D D’ Q Q Q E E’ Case 2 : Supply
increase less than demand increase P S S’ PE PE’ D D’ QE’ QE Q
The equilibrium quantity decrease, the equilibrium price decrease.
Case 3: Supply increase equals demand decrease P S S’ PE PE’ D D’ QE’ Q Q E
The equilibrium quantity remains the same and equilibrium price decreases.