Microeconomics Assignment 3 | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

MICROECONOMICS Individual Assignment 3 Full name: Nguyen Ha Chi Student ID: 11220995 Class: EBBA 14.1
------------------------------------------ Exercise 1:
a. Because of the effect of Hurricane Katrina had on New Orleans, about
250,000 residents had to relocate to nearby Baton Rouge. In other words, the
demand for housing in Baton Rouge had increased whereas the quantity of
houses in that city was limited. This led to the scarcity in the supply of houses,
which pushed house prices up (from $130,000 to $156,000).
The graph below illustrates the effects of Hurricane Katrina on the demand
for housing in Baton Rouge and the price and quantity of housing there.
b. Half of the people who had relocated to Baton Rouge moved back to rebuilt
New Orleans means that the demand for houses decreases. This led to an
excess supply, which caused the demand curve shift to the left and lowered
market price to meet equilibrium. Exercise 2:
The decrease in bee population brings about the decline in pollination, and in
turns reducing the supply of strawberries, raspberries… The shortage in supply
of ingredients for ice cream has caused the supply curve to shift to the left. Since input materials for producing ice cream are limited, the cost of manufacturing ice creams
will increase. As a result, it is predicted that the demand for ice cream will go down and the demand curve will move to the left. In conclusion, the decrease of the bee population will affect the market of ice cream in a rough way as ice cream is an elastic product. Exercise 3: a. We have P1: $10/meal/person P2: $5/meal/person Q1: 2 meals Q2: 6 meals → Total expenditure: $20 → Total expenditure: $30 ➔ %∆𝑄 2
Elasticity of demand: 𝐸 𝑑 𝑝 = = = 4 (Ignore the minus sign) %∆𝑃 −0.5 b.
- The promotional voucher has made a big impact on Mr. Binh family’s
monthly expenditure. By decreasing the cost of meals by 1%, t he quantity demanded rises b y 4 ,
% which increases total expenditure that
Mr. Binh spends on this restaurant by $10 (from $20 to $30).
- The change in total expenditure will remain consistent with the value of
demand if all other factors are held constant (Ceteris paribus).