Applied Microeconomics, Economics, Microeconomics

EDPE 4056: Applied Microeconomics Program in Economics and Education
Teachers College, Columbia University Prof. Francisco Rivera-Batiz

Problem Set 1

Please answer all of the following questions. Explain your answers clearly, showing how the results are obtained.

1. Assume that the market for wheat is perfectly competitive. Suppose the demand curve for wheat is given by:

QD = 200 – 2P

where QD is the quantity demanded, in bushels, and P is the price, in dollars per bushel. Suppose that the supply curve is given by:

QS = P – 10,

for values of P greater than or equal to 10, where QS is the quantity supplied, and QS = 0 when P < 0.

(1) Find the equilibrium price and quantity of wheat. Draw them in a clearly marked diagram.

(2) Suppose that unfavorable weather conditions shift the supply curve to the left, by 5 bushes of wheat at each price. Again find the equilibrium price and quantity, and draw the new equilibrium on the diagram you constructed for part (1).
(3) Going back to the demand and supply curves in part (1), assume now that a liberal government in the country decides the price of wheat is too expensive and decides to fix the price of wheat at P = 50 dollars per bushel. No one can sell or buy wheat except at this fixed price. What impact will this have on the market? How much wheat will be sold? How much will be demanded by consumers? Is this a good policy? Why?
Posted Date: 2/1/2012 2:16:27 PM | Location : United States







Related Discussions:- Applied Microeconomics, Economics, Assignment Help, Ask Question on Applied Microeconomics, Economics, Get Answer, Expert's Help, Applied Microeconomics, Economics Discussions

Write discussion on Applied Microeconomics, Economics
Your posts are moderated
Related Questions
Determinants of the Income Elasticity of the Demand: The determinants of income elasticity of demand are given below: The Degree of necessity of the commodity.

how advertisement affects the sales revenue of a form

Consumer Behavior: The government considers different calculations to help senior citizens with their increasing heating bills. One proposal on the table is to pay 20% of senio

1. The two-way ANOVA, non-orthogonal case, has been a vexing problem for ANOVA researchers for many years.  Please answer the following questions concerning the two-way non-orthogo

Short run production period and long run production period: The short run is a period of production during which some factors of production are fixed and some too are variable

explain the following disadvantages of amalgamation. Complex nature

assume you are selling a product and when your price is decreased by 29% your quantity demanded increases by 55%. What is your price elasticity of demand?


The End of the Productivity Slowdown As computers improved and spread throughout the U.S. economy in 1970's and 1980's economists kept waiting to see the wonders of computing

What do you mean by the utility function? The Utility Function: Sometimes this is easier to work directly along with the preference relation and its connected sets. Althou