1.
- Using graph paper, draw (on a single diagram) the demand and supply curves and indicate the equilibrium price and the equilibrium quantity.
- What impact would it have on the equilibrium price and the equilibrium quantity a fall in the price of beef (a hamburger input), if we keep all other factors constant? Explain your answer using a diagram.
- What effect would it have on the price equilibrium and the amount of hamburger equilibrium an increase in the price of the pizza (a substitute for the hamburger), if we keep all other factors constant? Explain your answer using a diagram.
2. Demonstrate how the following demand curves would change in response to the indicated changes.
- The effect of a drought on the demand curve for umbrellas.
B. The effect of a large increase in the price of Pop-corn on the demand for cinema lockers.
C. The effect on the demand curve for coffee of a fall in the price of tea.
3. Suppose there is a equilibrium between supply and demand. If the
Demand curve displacement to the right by a given magnitude, this could cause the equilibrium quantity to increase much or little depending on the slope (inclination) of the supply curve. Explain why with the help of a diagram.
4. During a year of operations, a company earns $ 450,000 in revenue and spends about $ 100,000 on labor, raw materials, rent, and utilities (electric power and water). The owner has invested $ 750,000 of his own funds in the company instead of investing them in the stock exchange (which would have guaranteed an annual income of 10%).
A. The explicit opportunity cost of using the resources obtained in the market is $ ______________. The implicit opportunity cost of using the owner's own resources for the company is $ ______________. The total economic cost is $ ______________.
B. The company earns an economic profit of $ ______________.
C. The gain, according to the accountant would be $ ______________.
D. If the owner could obtain a 15% annual gain on the money
Invested in the company, the economic gain would be ______________ (when income is $ 450,000).