Homework Sheet

Using the example that was done in class, draw 2 graphs for each of the following and determine what can be said about the final equilibrium quantity and price.

Shift both the supply and demand curves to the left.

Shift the supply curve to the right and the demand curve to the left.

Shift the supply curve to the left and the demand curve to the right.

HOMEWORK Unit THREE - Optional

Chapter 4 'The Market Forces of Supply and Demand'

Q4 Popeye's income declines, and as result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye's demand curve for spinach?

Q9 Describe the role of prices in market economics.

PA4 Consider the market for DVDs, TV screens, and tickets at movie theaters.

1. For each pair, identify whether they are complements or substitutes:

• DVDs and TV screens
• DVDs and movie tickets
• TV screens and movie tickets

1. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram to show what happens in the market for TV screens.
2. Draw two more diagrams to show how the change in the market for TV screens affects the markets for DVDs and movie tickets.

PA11 Suppose that the price of basketball tickets at your college is determined by market forces. Currently, the demand and supply schedules are as follows:

PRICE QUANTITY DEMANDED QUANTITY SUPPLIED

$4 10,000 tickets 8,000 tickets

$8 8,000 8,000

$12 6,000 8,000

$16 4,000 8,000

$20 2,000 8,000

1. Draw the demand and supply curves. What is unusual about this supply curve? Why might this be true?
2. What are the equilibrium price and quantity of tickets?
3. Your college plans to increase total enrollment next year by 5,000 students. The additional students will have the following demand schedule.

PRICE QUANTITY DEMANDED

$4 4,000 tickets

$8 3,000

$12 2,000

$16 1,000

$20 0

Now add the old demand schedule and the demand schedule for the new students to calculate the new demand schedule for the entire college. What will be the new equilibrium price and quantity?

Chapter 10 'Externalities'

Q1 Give an example of a negative externality and an example of a positive externality.

Chapter 11 'Public Goods and Common Resources'

Q4 Define and give an example of a common resource. Without government intervention, will people use this good too much or too little? Why?