Planning Methods HW 1 No particular formatting is required 1. Suppose the market for the Toyota Prius in a certain area has the following demand and supply curves: Q = 500 - 4P Qs = = 6P where price is for a single Prius (in thousands of dollars) and quantity is in thousands of cars sold. a. Use graph paper to determine the equilibrium price and quantity of Priuses in this market. (Use the graph paper on Canvas. To plot the graphs, use reasonable values of p, calculate QD and Qs, and plot the points on the graph paper. If you have problems plotting graphs, set up office hours, though it might be easier to google it.) b. Is there a surplus or shortage in this market if the price is initially $20 thousand? Explain how market forces would move from this price to the equilibrium price and quantity. Sketch a supply and demand curve and the iterative process below to illustrate your answer. 2. Draw supply and demand curves for single-family homes on a single graph. Identify the equilibrium price and quantity (the point, not the actual numbers). On the same graph, illustrate what happens to the equilibrium price and quantity when there is an increase in demand, i.e., there are forces that push the demand curve up and to the right. Offer a possible explanation for what could have pushed the demand curve up and to the right. 3. An increase in labor-costs has made operating public bus systems very expensive. Management decides to pass the costs on to bus riders. a. Illustrate on a supply-demand curve the short-term effect on the equilibrium price and quantity of bus rides?