Homework - Assignment Example

Topic: HOMEWORK Part2:Chapter 3: Supply and Demand - Online Chapter 2. Reading a demand curve If the price of siliconis $24000 per ton, buyers are willing to buy 40 million tons of silicon, The maximum price buyers are willing to pay for 80 million tons of silicon is $1600 per ton. The quantity demanded of silicon will Increase because silicon will only be used in highly valued application (Mishra, Rajan, p.15). 3. Consumers surplusSuppose Hilary is willing to pay $340 for a digital camera.

If she purchases it at the market price, her surplus will be $204. Demand Shifters The impact of government report about the outbreak of salmonella poisoning a recent kumquat crop will cause the demand curve to shift towards the left indicating a decrease in demand. This is shown in the diagram below;PRICE (Dollars per crate) Leftward shift in Demand curve D2 D1 Quantity Demanded (create of Kumquats)If income increases, the quantity demanded for inferior goods decreases as shown in the diagram belowPrice (Dollars per can) Leftward shift in Demand curve D1 D2 Quantity Demand (Cans of potted meat)If the price of price of green bell peppers, a substitute, of red bell peppers decreases, the demand for Red bell peppers will decreases as the demand curve shift towards the left while demand for green peppers shift towards the right (Mishra, Rajan,p.20). Price (Dollars per pound) Leftward shift in Demand curve D1 D2 Quantity Demand (Create of red bell peppers)If consumer expect the price of coffee to rise in the future, the current demand of coffee will increase as shown in the diagram below.

A rightward shift in demand curve. Price (Dollars per pound) Rightward shift in Demand curve D1 D2 Quantity Demand (Create of red bell peppers)5. The demand curve-Considering the graph. Supposing the price of Seden increases from $10,000 to $15,000. This would cause a movement along the demand curve-If the price of gas rise from $4 to $5.

Because sedan and gasoline are substitute, an increase in the price of gallon of gas shifts the demand curve for sedan to the Right6. Supply-Basic Concept Quantity supplied-amount of goods that the sellers are willing and able to sell at a given price.Supply Curve-is a function showing the correlation between goods prices of and the quantity of goods that the it that the seller are willing able to sell at a variety of prices. Law of supply-when all the other things are constant, price of goods increases the supply increases.

From the graph provided, the supply curve must be S1. Moreover, you know that at a price of $1.00, the quantity of soda supplied is 5million cans per year. 7. Reading a supply curve-Suppliers are willing to sell$160 millions of aluminum. Suppliers are willing to sell 200 million tons of aluminum at $2000 per tone-The quantity supplied of Aluminum will increase because producing Aluminum will become profitable for countries like Brazil and Jamaica. 8. Producer Surplus From the graph, the producer surplus for DVD Player will be $309.

Supply Shifters Graph showing Impact of subsidy on the supply of gasolinePrice (Dollars per Gallon) Rightward shift in Demand curve S1 S2 Quantity (Gallon of Gas)Graph showing impact of future increase in prices of coffeePrice (Dollars per Gallon) Rightward shift in Demand curve S1 S2 Quantity (Gallon of Gas)10.

The change in supply of SedansIncrease in price of sudden from $17,000 to $22,000, would cause the quantity supplied of Sadens to increase, which is reflected on the graph by a movement along the supply curve. -if workers accept the pay cut. It will cause a rightward shift of the supply curve, because the pay cut makes cars less expensive to build.11. Opportunity cost If price of bracelets decrease from $40 to $20, then Nick’s opportunity cost of making earnings decrease and making earnings is now less profitable than making bracelets.

-When price of bracelets decreases the supply curve of earrings shift up and to the left12. Shift in supply nor demandThe graph indicate the impact of producing hot dogs at a lower costPrice (Dollars per hot dog) Rightward shift in Demand curve S1 S2 Quantity (Hot Dogs).Part 3:Do You "Appreciate" Wendys Super Value Menu?1) The co-worker offers his colleague $1 for his double stack burger.

Because he rejects the offer, the co-worker argues that the burger must have appreciated.2) According to standard economic theory, consumer surplus must always be positive. Stella’s consumer surplus from…Offer price from friendPurchasing and consuming immediatelyPurchasing, selling, purchasing again, Then consuming$1.50$2.00$3.50$2.00$2.00$3.00$2.50$2.00$2.50The lowest cost Stella would accept in exchange for her burger is $2.00.Considering Stella’s value of time, the cost of obtaining a burger is $2.

00 and the lowest price she could accept from Robert is $2.00. The willingness of Stella to sell the double stack decreases with the shorter time she waits in line. Works CitedMishra, Rajan. Industrial Economics and Management Principles. New Delhi: Laxmi Publications, 2008. Print.