ECO 112 - Supply and Demand Monte Carlo Questions Cinestions 1 and 2 nse these curves: (You can assume they are both linear when you sketch the curves.) Curve A has points (4.8), (1.2), and (5,10) Curve B has points (0,50), (2,40), (4,30}, (6,20), and (8,10) 1. {a) Plot each curve. {b) Which curve is most likely demand and which curve is most likely supply? How do you know? {c) Estimate where the equilibrium point is. {a) Write an equation for each of the two curves. {b) Use the equations to find an equilibrinm. (Is it the =ame equilibrivm you found for question 17) CQuestions 3, 4, and 5 use these curves: QY = 3500 3P QF =500+ 7P {a) Plot each curve. (b} Estimate where the equilibrium point is. {c) Make a chart of three points on each curve: one at a price below equilibrium, one at the equilibrium price, and one at a price above equilibrinm. {a) Using algebra, find the equilibrium price. (b} Substitute the equilibrium price into the Demand equation to find quantity demanded at that price. {c) Substitute the equilibrium price into the Supply equation to find quantity supplied at that price. {d) What is the relationship between the two quantities you just found? If the first equation changes to 4000 3P, what will happen to the equilibrium price and quantity? | You don't need to find the new equilibrium, just deseribe the change.) Why might it have changed? Answer the following questions about Josh. Josh has $20 to spend and could buy 40 nails (if he spends all $20 on nails) or 10 bolts (if he spends all 320 on bolts). (a) Write Josh's budget constraint. In your equation, use N as the variable to represent the guantity of nails and B to represent the quantity of bolts. {b) What is the opportunity cost of a nail? {c) What is the opportunity cost of a bolt? {d) How many nails and how many bolts would Josh have if he spends $12 on nails and the remainder on holts