Economics of Demand and Supply 1. Economics education does not teach us how to earn a living. Does it therefore have much practical value? Discuss. 2. University Students have a choice of living in residence at the university or in private accommodation. The demand for university residence is shown below. The university has 1100 spaces at $200 each, per week, and cannot build more accommodation in the short run. Price per week ($) Number of students per week 300 300 280 420 260 500 240 580 220 650 210 800 200 1200 190 1600 180 2000 a. What problem results from the current pricing policy? b. How can the problem be solved? c. Estimate the market-clearing price. d. Suppose now that prices from private accommodation and transportation increase, while the prices of university rooms remain unchained. How will these price increases affect demand for university accommodation? 3. It is sometimes argued that minimum wage legislation creates unemployment. Use supply and demand analysis (and models) to show how this might be possible.