Supply and Demand and New Housing

Introduction to Microeconomics Fall 2012 Assignment 1 payable on October 4 in class (Total 80 points) Q1. (15 points) The following confuse channelizes return possibilities for two itemschairs and hold overs. Combination Chairs Tables A 0 6 B 8 5 C 15 4 D 21 3 E 26 2 F 30 1 G 33 0 (a) What is the opportunity cost of producing the first table? (33-30)/1=3 (b) What is the opportunity cost of producing the third table? (26-21)/1=5 (c) What is the opportunity cost of producing the sixth table? 8-0)/1=8 (d) Draw the occupation-possibilities curve for chairs and tables on a graph, placing tables on the vertical axis of rotation and chairs on the horizontal axis. (e) If the economy achieved greater efficiency in the production of tables, how would the production possibilities curve throw? (f) If a more efficient method acting of producing chairs were developed, how would the curve change? (g) Suppose more economic resources (labour, materials, and capital) became available. How would the curve change?Q2. (15 points) The following table describes the production possibilities of two cities. Red SweatersPer Worker per bit Blue SweatersPer Worker per Hour Montreal 3 3 Toronto 2 1 (a) Without trade, what is the expenditure of blue jump shots (in terms of red sweaters) in Montreal? What is the pr icing in Toronto? (b) Which city has an absolute advantage in the production of to each one coloration of sweater? Which city has a comparative advantage in the production of each colour of sweater? (c) If the cities trade with each other, which colour of sweater will each export? (d) What is the range of prices at which trade canister occur? Q3. 10 points) Canada has a mixed economic system, in which two marketplace and government activity play a role. For each of the following situation, explain why you think that it would be best dealt with by the market, or by government action. (a) There are likewise some(prenominal) restaurants in a town, and several are los ing money. (b) The gap between the rich and the poor is rattling wide, and the poorest citizens are unable to afford even the bare necessities of life. (c)The largest supermarket chain in the country is planning to buy the second-largest chain, which would give it a near-monopoly in m either communities. d) A trend toward healthier eating has driven the price of yellow-bellied up so sharply that many consumers are complaining to the government round the increased prices. (e) Several manufacturers are cutting costs by dumping waste into a local river. Q4. (5 points) A customer is about to buy 4 shirts at $20 each. When she finds that they have just departed on sale for $15, she buys 5 shirts kind of. Is her demand for these shirts elastic or springless? Explain the reason for your answer. Q5. (10 points) From 1997 to 2001, the price of coffee on world markets cut out from $1. 60 U. S per pound to $0. 6 U. S. per pound&8212 a step-down of 65 percent. (a) What is the most logic al explanation for such a come in price? (b) What explains the large size of the price decrease? (c)Draw a graph representing the factors in (a) and (b). Q6. (10 points) Assume the demand schedule for ice- beat cones can be represented by the equation QD=160-3P, where QD is the cadence demanded and P is the price. The publish schedule can be represented by QS=140+7P, where QS is the sum supplied. (a) estimate the equilibrium price and quantity in the market for ice-cream cones. (b) The Canadian connectedness f Ice-Cream Eaters complains that the equilibrium price calculated in part (a) is too high, and their members cannot eat enough ice-cream cones at this price. They lobby the government to impose a price ceiling on ice-cream cones of $1. What is the quantity demanded at this price? The quantity supplied? Is there a shortage or surplus of ice cream? How big is it? What if a $2. 50 price ceiling was imposed kinda? (c) Say instead that the Canadian Association of Ice-Cream M akers lobbies the government, arguing that the equilibrium price is too low for their members to make a decent living.They want a price floor of $3 per cone. What is the quantity demanded at this price? The quantity supplied? Is there a shortage or a surplus of ice cream? What is it? What if a price floor of $1. 50 was imposed instead? Q7. (15 points) One of the key prices Statistics Canada monitors is the price of new housing. The statistics do not show the actual price of housing in dollars, but rather an powerfulness of prices that is set at 100. 0 in 2007, with the force in each year after 2007 showing how much prices have increased since 2007.To nab how the price of new housing has changed over the past 5 years, hear the Statistics Canada website at http//www. statcan. gc. ca/tables-tableaux/sum-som/l01/cst01/manuf12-eng. htm, and search for New housing price index for Canada. Calculate the percentage increase in new housing prices each year over the past five years (2007-2 011). What trend do you see in new housing prices for Canada (national average level), and is there any noticeable trend for the Metropolitan areas? What demand side or supply side factors might explain these?