1 Suppose the market demand for pizza is given by Qd = 300 - 20P and the market supply for pizza given by Qs = 20P - 100 a. Graph the supply and demand for pizza using $5 through $15 as the value of P. b. In equilibrium, how many pizzas would be sold and at what price. c. What would happen if suppliers set the price of pizza at $15? Explain the market adjustment process. d. Suppose the price of hamburgers, a substitute for pizza, doubles. This leads to a doubling of the demand for pizza (at each price consumers demand twice as much pizza as before). Write the equation of the new market demand for pizza. e. Find the new equilibrium price and quantity for pizza. f. If the price of Pizza is $2 what is the elasticity of demand and supply for pizza? Now if the price increases to $5 calculate the demand and supply elasticities. Question 2 For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? a. People decide to have more children. b. A strike by aluminum workers rises aluminum prices. c. Engineers develop new automated technology for use in production. d. A stock market crash lower people's wealth. e. Batelco increases the prices of mobile services. f. Diminishing returns means rising costs while economies of scale means falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not? Question 3 The information below for a company selling notebooks for BD3 each. No of workers No. of notebooks produced per day MP TR MRP 0 0 1 30 2 80 3 110 4 135 5 20 6 170 7 30 8 15 a. Fill all the blank in the table. b. If the company must pay a wage rate of BD40 per week, how many workers should it hire? Explain why. c. Suppose the wage rate rises to BD50 per week. How many workers should be hired now? Why? d. Now suppose that the company buys new technology that doubles output at each level of employment and that the price of notebooks remains at BD3. What is the effect of the new technology on MP? MRP? At a wage of BD50 how many workers the company should hire now