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
give a detailed discussion on the term economics of scale as applied to economics, highting examples,limitation,and original of economics of scale.

#quesExamine the expenditure trends over the last 40 years. What are the direction and magnitude of changes in spending in and between these various categories (with the exception


# 1 Question: Consider a competitive market for Berries. The market demand for the berries is Qd=50-P (Qd is the quantity demanded (cartons) and P is the price in $. The market sup

Aggregate Supply When referred to in the circumstance of GNP or GDP, aggregate supply refers to the labor and capital needs to proceeds the level of products and services need

Effects of inflation: On Income Earners:Those on fixed incomes or assets (fixed in nominal terms) lose. However, those on incomes, which are directly related to the price leve

1. Mrs Munyarryun, 67 years, has been retired from her work for two years. She rings for advice about urinary incontinence, a problem she has experienced over the last 6 months. Wh

The Bushman Cinema is the only movie theatre located in the medium-size country town of Sleepy Hollow.  The owner wants to charge an admission fee of $10 per seat and past experien

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

GIVE AND EXPLAIN IN DETAIL,ARGUMENTS GIVEN TO EXPLAIN LEONTIEF''S EMPERICAL FINDINGS ON THE HECKSCHER-OHLIN MODEL OF TRADE.