Understanding Housing & Ice Cream Market Dynamics | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

Exercise 1:
because of the effect of hurricane Katrina had on new Orleans, about 250,000
residents had to located to nearby Baton Rouge. In other words, the demand for
housing in Baton Rouge had increase 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 1$30,00 to $156,000).
The graph below shows the effect of Hurricane Katrina on the demand for housing
in Baton Rouge and the price and quantity of housing there Excercise 2:
In the last few years thousands of honeybee colonies have vanished, a result of bee
colony collapse disorder (CCD). Roughly one-third of the US food supply-
including a wide variety of fruits, vegetables, and nuts- depends on pollination
from bees. The decline of honeybees threatens $ 15 billion worth of crops in the
US. The decrease in pollination by bees has decreased the supply of strawberries,
raspberries, and almost, leading to higher prices for these ingredients for ice cream.
The higher price for berries and nuts have increased the cost of producing food
products, such as ice cream, increasing their prices as well. Questions Draw graphs
to show the effects of the decline of the bee population on the market for ice cream and explain that effects.
The decrease in bee population brings about the decline in pollination, and in turns
reducing the supply of the 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 cream 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 in the bee population will affect the market of ice
cream in a rough way as ice cream is an elastic product Excercise 3: a, Q1 = 1 meal/month Q2 = 3 meals/month ΔQ = =1.100%=200% P1 = 10$/meal P2 = 10$/2meals = 5$/meal => %ΔP = =−50%
Price elasticity of demand: Epd =
The demand for the meals at the restaurant is elastic.
b) Explain what impact the promotional vouchers had on the Binh’s monthly
expenditure on meals at this restaurant. Is the change in total expenditure
consistent with the value of demand you calculate?
- Promotional vouchers increased Binh’s monthly expenditure on meals at this restaurant.
- The change in total expenditure is consistent with the value of demand because the Epd is
still higher than 1, which mean we can still decrease the price for a higher total revenue. Exercise 4: 4.1:
The price elasticity of demand for apartments is 1.0 → E D P = 1.0
It means that when % P ↑↓ 1 %, % Q ↑↓ 1% Example:
The initial price of rental apartments is $400 and the initial quantity 1000 apartments.
when the price of rental apartments is increases 1%, then PAC (the price of rental
apartments at that time) is $404. The quantity decreases 1% and becomes. QC = 990 apartments.
Similarly, PB (the price of rental decreases 1%) = $396. QB (the quantity at that time) = 1010 apartments. P Q A 400 1000 B 396 1010 C 404 990
The price elasticity of sully of apartments is 0.5 -> E S P =0.5. It means that when %P 2%, %Qs ↑↓ ↑↓ 1%
Similarly with demand, we have the following table for supply P Q A 400 1000 B 408 1020 C 392 980 4.2 Demand ↑ 15% 10%=
4.3: Predict the effect of the increase in demand on the equilibrium price of apartments.
Percentage change in equilibrium price =
So, if an increase in college enrollment is expected to increase the demand for
apartments in college town by 15%, new equilibrium price of apartments is: 400. (100%+10%) = 440 $
The initial demand equation is: P = 800 - 0.4*Qd
=> The after demand equation is: 1.1P = 800 - 0.4*1.15*Qd => P = Exercise 5:
because the elasticity of demand is 0.7 (0.7 <1) => Demand is less elastic with
price, so the demand curve almost does not move, it only moves along the line (dịch chuyển dòng) => =8%
=> new price of steel: 100$ + 8%*100$ = 108$
Due to steel import restrictions, prices increased by 8% compared to the initial
equilibrium price, so the New price of steel is 108$ b, graph: