Application of Demand & Supply concepts:

In this activity you will apply the tools of supply and demand to determine the equilibrium price and quantity.

Answer the following questions:

1. Suppose that in a recent market period, the following relationship existed between the price of tablet devices and the quantity supplied and quantity demanded.

Price Quantity Demanded Quantity Supplied

330$ 100 million 40 million

340$ 90 million 60 million

350$ 80 million 80 million

360$ 70 million 100 million

370$ 60 million 120 million

a). What are the equilibrium price and quantity?

b).If the industry price is $340, is there a shortage or surplus of tablet devices? How much is the shortage or surplus?

c). If the industry price is $370, is there a shortage or surplus of tablet devices?How much is the shortage or surplus?

2..Give an example of a complement and a substitute in consumption for each of the following items.

1. Eggs
2. Tennis racquets
3. Coffee
4. Cars

3. What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Smart car?(Demand increase or decrease)

1. Small automobiles become more fashionable.
2. The price of large automobiles rises (with the price of small autos remaining the same).
3. Income declines and small autos are an inferior good.
4. Consumers anticipate that the price of small autos will greatly come down in the near future.
5. The price of gasoline substantially drops.

4.What effect will each of the following have on the supply ofautotires?(Supply will increase or decrease)

1. A technological advance in the methods of producing tires.
2. A decline in the number of firms in the tire industry.
3. An increase in the prices of rubber used in the production of tires.
4. The levying of a per-unit tax on each auto tire sold.
5. The granting of a 50-cent-per-unit subsidy for each auto tire produced.

In this activity you will apply the tools of demand & supply to analyze policies.

Part 1.The following table depicts the quantity demanded and quantity supplied of studio apartments in a small college town.

Monthly Rent Quantity Demanded Quantity Supplied

600$ 3000 1600

650$ 2500 1800

700$ 2000 2000

750$ 1500 2200

800$ 1000 2400

A) What are the market price and equilibrium quantity of apartments in this town?

B)If this town imposes a rent control of $600 per month, how many studio apartments will be rented?

C)What do you predict if the rent rises to $ 800?

D)Explain what would happen if there was safety issue of renting the apartments resulting in the decrease to 700 units? What would be new equilibrium price and quantity.

E)Define Price Floor and Price ceiling? Which leads to shortage? Which leads to a surplus? Why?

2. In advance of the recent increase in the U.S. minimum wage rate, the government of the state of Arizona decided to boost its own minimum wage by an additional $1.60 per hour. This pushed the wage rate earned by Arizona teenagers above the equilibrium wage rate in the teen labor market. What is the predicted effect of this action by Arizona's government on each of the following?

A)The quantity of labor supplied by Arizona teenagers

B)The quantity of labor demanded by employers of Arizona teenagers

C) The number of unemployed Arizona teenagers

Please include the questions with your answers.