Assignment 1
Student’s Name: Emmanuel Fraser XXXXXXXXXXID: XXXXXXXXXX
Question 1
Show and explain how each of the following will affect the cu
ent supply (Increase supply or Decrease Supply) for bicycle.
a. A rise in wage rates
Answer:
. An increase in the number of sellers of bicycle
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c. A tax placed on the production of bicycle
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d. A subsidy placed on the production of bicycle
Answer:
Question 2
Consider the following statements. Show and explain whether the demand curve will shift leftward/downward or rightward/upward.
a. An increase in income (the good under consideration is an inferior good)
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. A rise in the price of a complementary good
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c. A fall in the price of a substitute good
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d. A rise in the number of buyers
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Question 3
Consider the car market during XXXXXXXXXXThe equili
ium price of cars remained constant, but the equili
ium quantity of cars increased. What will be the effect on supply and demand of cars between 2018 and 2019? Draw a graph and explain.
Answer:
Question 4
Consider the pizza market in BC. Suppose an innovation in cheese processing technology makes it possible to produce more pizzas at a lower cost than ever before. Holding all other factors constant, what will be the effect of this technology on pizza market. Draw a graph and explain.
Answer:
Question 5
Consider the market for soft drinks in Canada, where there are over a thousand stores that sell soft drinks at any given moment. Suppose the health authority issues a public warning that consuming soft drinks is not good for health. Holding all other factors constant, what will be the effect on market? Draw a graph and explain.
Question 6
The following table contains information about the wheat market. Use the table to answer the following questions.
Price per bushel (in $)
Quantity Demanded (bushels)
Quantity Supplied (bushels)
2
40,000
0
4
36,000
4,000
6
30,000
8,000
8
24,000
16,000
10
20,000
20,000
12
18,000
28,000
14
12,000
36,000
16
6,000
40,000
1. What are the equili
ium price and quantity of wheat?
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1. Suppose the prevailing price is US$12 per bushel. Is there a shortage or a surplus in the market?
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1. What is the quantity of the shortage or surplus?
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1. How many bushels will be sold if the market price is US$4 per bushel?
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1. If the market price is US$8 per bushel, what must happen to restore equili
ium in the market? Explain
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1. Suppose the market price is US$16 per bushel. Is there a shortage or a surplus in the market?
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1. What is the quantity of the shortage or surplus?
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1. How many bushels will be sold if the market price is US$14 per bushel?
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1. If the market price is US$16 per bushel, what must happen to restore equili
ium in the market? Explain
Answer: