EKN 3101
GAYA CARA PEMIKIRAN EKONOMI
ASSIGNMENT 1
(THE MARKET FORCES OF SUPPLY AND DEMAND)
SARJANA MUDA PENGURUSAN (PEMASARAN)
LECTURER: PUAN HASLINDA
GROUP MEMBERS
VIKENASWARY GUNASEGAR UK 16464
CHEAH JUN HWA UK 16508
NORSALEHA BINTI REMLAN UK16731
NOR AZIZAH BINTI YUSOF UK16752
LAU CYZIN UK16784
NUR AZLINDA BINTI ISMAIL UK16855
NORASHIKIN BINTI AZIZ UK17193
MICRO ECONOMIC
1) Explain each of the following statements using supply-and-demand diagrams.
(a) When a cold snap hits Florida, the price of orange juice raises in supermarket
throughout the country.
Price
Quantity
D1
Q1
S1
S2
0
E2
E1
P2
P1
Q2
The figure show the orange juice market when demand and supply curve cross in the
point of equilibrium at E1, where the price of the equilibrium is at P1 and the quantity of
equilibrium at Q1. When the cold snap hits Florida, the supply for orange juice will of the
weather. Through that, the supply curve will shift to the left from S1 to S2. Result is the
price of the orange juice raises from P1 to P2 and the quantity of orange juice falls from
Q1 to Q2 just because the needs for orange juice lesser.
(b) “When the weather turns warm in New England every summer, the price of hotel
rooms in Caribbean resort plummets.”
Price
Quantity
D1
S2
S1
0
E1
E2
P1
P2
Q1 Q2
This figure show the hotel rooms market in Caribbean resort where the demand and
supply curve cross in the point of equilibrium at Q1. When the weather turns warm in
New England every summer, the owner of the resort will decrease the price of the resort
because of the season of vocation. Through that, the owner of the resort will supply more
hotels rooms for vacationing people by moving the supply curve to the right from S1 to
S2. Result this, the price for a hotel room falls from P1 to P2 and the quantity of the hotel
room increase from Q1 to Q2 just to get more customer.
(c) “When a war breaks out in the Middle East, the price of gasoline rises, and the price
of a used Cadillac falls.”
E1
P1
This figure show the Cadillac market at the equilibrium market of E where the
equilibrium price is at P and the quantity of equilibrium is at Q. When the war break out
in the Middle East, the price of gasoline rises and it effects the used of Cadillac (car) and
it’s consider as compliments between this two things. Via that, the demand curve shift to
the left where DD shift to D1. Result, new equilibrium at cross E where the price of
Cadillac falls from P to P1 and the quantity of Cadillac falls from Q to Q1.
Price of Cadillac
0
S
D
E
P
D1
Q1 Q
Quantity of Cadillac
2)”An increase in the demand for notebooks raises the quantity of notebooks demanded
but not the quantity supplied.” Is this statement true or false? Explain.
It is true. The figure1 show the increase in the demand of notebook would cause a
increase in the quantity demand for the notebook. Figure1 show the equilibrium of the
notebook market where the demand and supply cross at point E1, the equilibrium price at
P1 and the equilibrium quantity at Q1. An increase in the demand for notebook raises the
quantity of notebooks demand. This can show where shift the demand curve to the right.
The equilibrium price and the equilibrium quantity both rise. The demand curve shift
from D1 to D2, which causes the equilibrium price to increase from P1 to P2 and the
equilibrium quantity to increase from Q1 to Q2. This show the increase will happen at the
quantity demand but not the quantity supplied because the demand curve shifted.
S1
D1
E1
Quantity of notebooks
D2
Q1
P1
0
P2
Q2
E2
FIGURE 1
Price of notebook
3) Consider the market for eggs. For each of the events listed here, identify which of the
determinants of demand or supply are affected. Also indicate whether supply or demand
increases or decreases. They draw a diagram to show the effect on the price and quantity
of eggs.
(a) The price of grains that fed to hens falls.
The figure show the eggs market where demand and supply curve cross in the point of
equilibrium at E1, where the price of the equilibrium at P1 and the quantity of
equilibrium at Q1. When the price of grains that fed to hens falls, raise more hens is
profitable and firms supply more eggs later. It shift supply curve to the right where S1S1
to S2S2. Result, the price of an egg falls from P1 to P2 and the quantity of an eggs
increase from Q1 to Q2 at the new equilibrium of E2.
(b) The price of bacon falls.
The figure show the eggs market where demand and supply curve cross in the point of
equilibrium at E1, where the price of the equilibrium at P1 and the quantity of
equilibrium at Q1. Bacon and eggs are the substitute. When the price of bacon falls,
people would to start to move their food to bacon rather than eggs because price of bacon
fall. Via that, it shift demand curve to the left from D1D1 to D2D2. Result, the price of
eggs will fall from P1 to P2 and the quantity of eggs will falls from Q1 to Q2 at the new
equilibrium of E2.
(c) A new study is release that indicates the eating eggs is hazardous to one’s health.
Demand, D1
Price of eggs, P
Quantity of eggs, Q0
Supply, S1
Equilibrium, E1P1
Q1
P2
Q2
E2
S1
D1
D2
D2
The figure show the eggs market where demand and supply curve cross in the point of
equilibrium at E1, where the price of the equilibrium at P1 and the quantity of
equilibrium at Q1.When people start to notice that taking eggs is risky to one’s health,
they have to start to change their perception of taking lesser of eggs.Via that, it shift
demand curve to the left from D1D1 to D2D2. Result, the price of eggs will fall from P1
to P2 and the quantity of eggs will falls from Q1 to Q2 at the new equilibrium of E2.
(d) The number of eggs-producing farms falls.
Demand, D1
Price of eggs, P
Quantity of eggs, Q0
Supply, S1
Equilibrium, E1P1
Q1
S1
D1
S2
S2
E2P2
Q2
The figure show the eggs market where demand and supply curve cross in the point of
equilibrium at E1, where the price of the equilibrium at P1 and the quantity of
equilibrium at Q1.When the number of eggs producing farms falls it make the supply
curve shift to the left from S1S1 to S2S2. Result, the price of eggs increase from P1 to P2
because of the decrease of quantity of eggs from Q1 to Q2 at the equilibrium E2.
(e) This weekend is the Easter holiday.
The figure show the eggs market where demand and supply curve cross in the point of
equilibrium at E1, where the price of the equilibrium at P1 and the quantity of
equilibrium at Q1.When that weekend is the Easter holiday, consumer need more eggs
for that occasion. Via that, the demand curve shift to the right where D1D1 to
D2D2.Result, the price of eggs increase from P1 to P2 where the quantity increases from
Q1 to Q2 at the new equilibrium of E2.
7. Using supply- and- demand diagrams show the effect of the following events on
the market for personal computers.
a) The price of computer chips falls.
PPrice
Quantity
SS
E
E1
SS1
DD
0 Q1Q
P
P1
The equilibrium at this market at E1 where the price of the equilibrium is at P1
and the quantity of equilibrium is at Q1. When the price of computer chips falls,
producing computer is profitable, and firm supply more computer. Via that, it
shift the supply curve to the right where SS to S1 in the new equilibrium of E1.
Result the price of computer will falls from P1 to P2 and the amount of the
quantity increase from Q to Q1
b)There is a rise in consumer incomes.
PPrice
Quantity
SS
E
DD
0 Q1Q
P
P1
DD1
E1
The equilibrium of this market at E1 where the price of equilibrium is at P1 and
the quantity of equilibrium is at Q1.When the consumer incomes rises. Via that,
consumer willing to buy more personal computer so it shift the demand curve
from DD to DD1. Result ,the price of computer will raise from P1 to P2 and the
amount of quantity will decrease from Q1 to Q2.
c) The price of computer software rises.
PPrice
Quantity
SS
E
DD
0 Q
P
DD1
Q1
P1 E1
The equilibrium of this market at E1 where the price of equilibrium is at P1 and the
quantity of equilibrium is at Q1. When the price of computer software rises, the quantity
of computer software is falls. It can effect to personal computer because the computer
software and personal computer is compliments. Via that, the demand curve will move to
the left from DD to D1D1. Result, the new equilibrium was stated at E1 where the price
of computer false from P1 to P2 and the amount of quantity will decrease from Q1 to Q2.
d) Universities require incoming freshmen to have their own personal computer.
PPrice
Quantity
SS
E
DD
0 Q1Q
P
P1
DD1
E1
The equilibrium of this market at E1 where the price of the equilibrium is at P1 and
the quantity of equilibrium is at Q1.When the universities require incoming freshmen
to have their own personal computer, the demands for personal computer is increase.
This is because the freshmen must buy their own personal computer. Demand will
shift to the right from DD toD1 and the new equilibrium at E1. Result the price of
computer increase from P1 toP2 and the amount of quantity will rise from Q1 toQ2.
12. Suppose that the price of basketball tickets at your college is determined by
market force. Currently, the demand and supply schedule are as follow:
Price Quantity Demanded Quantity Supplied
RM 4 10,000 Tickets 8,000 Tickets
RM 8 8,000 8,000
RM 12 6,000 8,000
RM 16 4,000 8,000
RM 20 2,000 8,000
a) Draw the demand and supply curve. What is unusual about this supply curve?
Why might this be true?
PRICE
20
16
12
8
40
2000 4000 6000 8000 10,000
QUANTITY
-The usual for this supply curve is inelastic. This might be true is no matter how
much the price increase of the ticket, the quantity supplied still stay the some
amount of 8,000 tickets.
b) What are the equilibrium price and quantity of tickets?
The equilibrium price is RM 8 and the quantity of tickets is 8,000 units.
c) Your college plan to increase total enrollment next year by 5,000 students. The
additional student will have the following demand schedule:
Price Quantity Demanded
RM 4 4,000 Tickets
RM 8 3,000
RM 12 2,000
RM 16 1,000
RM 20 0
Now add the old demand schedule and the demand schedule for the new student
the calculate the new demand schedule for the entire college. What will be the
new equilibrium price and quantity?
Price Quantity Demanded Quantity Supplies
RM 4 14,000 8,000
RM 8 11,000 8,000
RM 12 8,000 8,000
RM 16 5,000 8,000
RM 20 2,000 8,000
-The new equilibrium of the price is of RM 12 where the quantity demand and
supply is at 8,000 units.
13. Market research has revealed the following information about the market for pizza:
The demand schedule can be represented by the equation Qd=380-20P, where Qd is the
quantity demanded and P is the price. The supply schedule can be represented by the
equation Qs=-120+30P, where Qs is the quantity supplied. Calculate the equilibrium
price and quantity in the market for pizza.
Answer:
Qd=380-20P
Qs=-120+30P
Qd=Qs
380-20P = -120+30P
380+120 = 20P+30P
500 = 50P
500/5=P
10=P
Qs=-120+30P
=-120+30(10)
=-120+300
= 180 unit
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