prob set 1 Essay

640 Words Nov 23rd, 2013 3 Pages
Problem Set 1
Name: ___Christian Collins___________________________________________

Problem Set 1 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 2.

1. Based on the information provided for the market for video games, answer the following questions.

PRICE
Q DEMANDED
Q SUPPLIED
$50
5
9
$45
7
7
$40
9
5
$35
11
3
$30
13
1

a.) Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).
b.) What is the equilibrium price and quantity?
a.)
b.) PRICE: _____$45_________________ QUANTITY: ________7______________
Now, assume that a new government report claims that video game play stimulates the brain.
c.) What will this do to
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In the space provided you are to do a number of things:
a. Draw and properly label a demand and supply curve.
b. Indicate where the equilibrium Price and Quantities are located.
c. How do things change based on the following scenario?
The market for hybrid cars is changing. There are more providers but due to bad publicity and poor performance, demand is falling.
Knowing this information, you need to first tell me, and then show this in your graph:
1.) What is the market you are dealing with? Product market
2.) Which curve(s) change and based on the lists in the text of what causes demand and supply to shift what are the causes of theses shifts? D1 changed moving leftward indicating a decrease in demand due to a technological change: a technological setback causes a decrease. This causes price to go down as well as the demand is lower.
3.) In what direction do they change? Downward, decreasing to the left
What happens to the equilibrium price and quantity after these changes are put into effect? Do they go up, down or stay the same?P:_____down_____________Q:_____down__________________

4. Using the following information for individuals and their willingness to pay for a bottle of ginger ale, calculate the total consumer surplus at a market price of $5.

Maximum amount a buyer would pay for ginger ale
If price falls to $2
Scott
$10---$5
$8
Dennis
$4---($1) negative, no surplus
$2
Greg
$8---$3
$6
Dave
$7---$2
$5
Mike
$5---even
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