Search & Filtering
Suppose the government sets a price floor for student books that is above the
competitive equilibrium price. Draw a graph to illustrate the welfare impacts of this policy.
According to the New York Times article, the Venezuelan government "imposes strict
price controls that are intended to make a range of foods and other goods more
affordable for the poor. They are often the very products that are the hardest to find"
Draw a graph to illustrate the welfare impacts of this policy and why the statement is true.
Discuss the properties of isoquant curves.
Discuss why operating in Stage III of the production process is an irrational decision.
Discuss how the law of diminishing marginal productivity works.
Explain why all inputs become variable in the long run.
Cite a real-life example of how a production process takes place.
The store sells a special item whose daily demand can be described by the
following pdf:
Daily demand D 0 1 2 3
P(D) 0.15 0.3 0.45 0.1
The store is comparing two ordering policies: (1) Order up to 3 units every
3 days if the stock level is less than 2, else do not order. (2) Order 3 units if the
stock level is zero, else do not order. The fixed ordering cost per shipment is $200.
Immediate delivery is expected.
Which policy should the store adopt to minimize the total expected daily
cost of ordering?
Q. 6. Explain each of the following statements using supply-and-demand diagrams. [only graph]
a. “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.”
b. “When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts drop.”
c. “When a war breaks out in the Middle East, the price of gasoline rises and the price of a used Cadillac falls.”
Q. 7. Over the past 30 years, technological advances have reduced the cost of computer chips. How do you think this has affected the market for computers? For computer software? For typewriters? [only graph]
Q. 8. Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts. [Explain step by step like we did in the class]
a. A hurricane in South Carolina damages the cotton crop.
b. All colleges require morning exercise in appropriate attire.
c. Both ‘a’ and ‘b’ occur together and the effect of ‘a’ is greater than the effect of ‘b’
Q. 1. What is law of demand? Explain why there exists a negative relationship between the price of a product and its quantity demanded? Note: discuss the three reasons why the law holds. (Income, substitution effects and law of diminishing marginal utility)
Q. 2. Discuss the determinants of Demand in details with examples.
Q. 3. Popeye’s income declines, and as a result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for spinach?
Q. 4. What are the supply schedule and the supply curve, and how are they related? Why does the supply curve slope upward?
Q. 5. Does a change in producers’ technology lead to a movement along the supply curve or a shift in the supply curve? Does a change in price lead to a movement along the supply curve or a shift in the supply curve?
