1. [Market Equilibrium] Following table shows information about the demand for 20lbs box of apples in the wholesale market. (a) Draw a graph with Price (P) on the vertical axis and Quantity demanded (Qd) on the horizontal axis? (b) Write the equation for this inverse demand function. (c) What is the quantity demanded when P=$50/ box ) ? Following table shows information about the supply of 20lbs box of apples in the wholesale market. (i) Draw a graph with Price (P) on the vertical axis and Quantity supplied (Qs) on the horizontal axis? (ii) Write the equation for this inverse supply function. (iii) What is the quantity supplied when P=$50/ box ) ? Next we determine the market equilibrium. (I) Find out the equilibrium price and quantity. (II) What are the consumers' surplus, producers' surplus and the total surplus? (III) What is the shortage / surplus if the Government imposes a price floor of $60/ box in this market? (IV) What is the shortage / surplus if the Government imposes a price ceiling of $30/ box in this market? A person has $200 to spend on two goods ( x and y ) whose respective prices are $4 and $5 per unit. (a) Draw the budget line showing all the different combinations of the two goods that can be bought with the given budget. Page 1 of 2 Ram Sewak Dubey Midterm I Review Questions 2023/09/23 (b) What happens to the budget line if the budget (money available to spend) falls by 50%. (c) What happens to the budget line if the price of good x doubles? (d) What happens to the budget line if the price of good y falls to $4 ? 3. [National Income Model] Let AE=C+I+G+NX where AE is the aggregate expenditure, C is the consumption function, I is investment, G is government expenditure and NX is the net export. Given C=100+0.75Y where Y is the national income and I=100,G=100,NX=100 (a) Graph the consumption function with Y on the horizontal axis and C on the vertical axis. (b) Graph the aggregate expenditure function (AE) with Y on the horizontal axis and AE on the vertical axis. (c) Find the equilibrium level of income without using graph analytically