Microeconomics Issues - Assignment Example

Instructions:-1. Activity is individual 2. Plagiarism of any means will be report and will lead to reduction of weight age. Max. Marks: 5.Q.1 = Using the data below: A= Find out the Quantity demanded by the Market B= Draw the Demand Curve for each BuyersPQD1QD2QD3QDM5605570185105050651651540456014520304055125252035501053010304585355254070Q.2 = Using the data below: A= Find out the Quantity Supplied by the Market B= Draw the Supply Curve for each Suppliers PQS1QS2QS3QSM552570100101030651051520356011520304055125254045501353050504514535605540155Q.

3 = Using the data from Q.1 & Q.2 above: Draw the market demand and the market supply curves and show the equilibrium between the demand and supply . Q. 4 = Show with the help of diagrams the effects of the changes either in demand or in supply on the market equilibrium: 1) – A change in demand (decrease & increase) with no change in supply. 2) – A change in Supply (decrease & increase) with no change in demand. 3) – A change in demand and supply moves in the same direction (increases & decreases) 4) – A change in demand and supply moves in the opposite direction (increases & decreases)AnswersQuestion 1 A.

Market demand is the summation of individual demand of a product by buyers at a given price. Therefore at price 5 we add quantity demanded by 1, 2 and 3, that is, 60+55+70 = 185; hence the quantity demanded by the whole market at price 5 is 185 units. Results are shown in the table on Q.1B. Individual Demand curve 1Individual Demand curve 2Individual Demand curve 3Question 2 A. the market supply is the total amount supplied by all the suppliers at the existing price. For example at price 35, the 1st supplier is willing to supply 60 units, the 2nd supplier 55 units and 3rd supplier 40 units.

Therefore the market supply at that price is 60+55+40 = 155 units. There 155 units are supplied to the market at that price. Results are shown in the table in Q.2B. Individual Supply curve 1Individual Supply curve 2Individual Supply curve 3Question 3Market DemandMarket SupplyEquilibrium Quantity and DemandQuestion 4 1) – A change in demand (decrease & increase) with no change in supply. Price D2 D D1 Quantity An increase in demand as a result of a decrease in prices without a corresponding change in supply will push the demand curve upwards and hence result to a shift of the demand curve to the right, that is, from D to D2.

The equilibrium moves to the left in case of a decrease in supply and to the right in case of an increase in supply. 3) – A change in demand and supply moves in the same direction (increases & decreases) An increase in both supply and demand. D1 D S S1 Price Quantity An increase in both supply and demand will expand the market resulting in an increase in both the prices of the goods and also the quantity of goods supplied and demanded. The equilibrium shifts to the right (William 12).

A Both decrease in demand and supply D S1 D1 S Price Quantity A decrease in both demand and supply will contract the market leading to lower prices of goods and lower quantities of goods traded. Hence the equilibrium price and quantity shifts to the left (William 13).4) – A change in demand and supply moves in the opposite direction (increases & decreases) A decrease in demand and increase in supply D S S1 Price D1 QuantityA decrease in demand as supply increases results to surplus products in the market, and to sell the surplus prices decrease hence encouraging demand.

An increase in demand and a decrease in supply D1 S1 D S Price QuantityAn increase in demand as supply decreases results in an increase in prices as the many customers creates a shortage in the market and hence prices increase as quantity supplied decrease (William, 12).