Economics

Problem 1.

P DVD players D DVDs is affected

What is impact on the market for DVDs?

P

Q

D1

D2

P1

P2

Q1

Q2

S

DVDs market graph

P

Q

D1

D2

P1

P2

Q1

Q2

S

DVDs market graph

DVD Players and DVDs are demand compliments.

If P DVD players D DVDs

If D DVDs Pe & Qe

Problem 2.

P of desktops D for laptops is affected

What is impact of decrease of P of desktops on the market for laptops?

Desktops & Laptops are demand substitutes.

P

Q

D2

D1

P2

P1

Q2

Q1

S

Graph of Market for Laptops

P

Q

D2

D1

P2

P1

Q2

Q1

S

Graph of Market for Laptops

If P of desktops D for laptops

D for laptops Pe & Qe

Problem 3.

P of lumber S paper is affected

What is the impact of decrease of P of lumber on the paper market?

Lumber & Paper products are supply compliments

P

Q

D

P1

P2

Q1

Q2

S1

Graph of Market for Paper

S2

P

Q

D

P1

P2

Q1

Q2

S1

Graph of Market for Paper

S2

Production of lumber Production of paper

P of lumber Qs of lumber S of paper

S of paper Pe & Qe

Problem 4.

Population of cell phone producers S of cell phones

P

Q

D

P1

P2

Q1

Q2

S1

Graph of Market for Cell Phones

S2

P

Q

D

P1

P2

Q1

Q2

S1

Graph of Market for Cell Phones

S2

S of cell phones Pe & Qe

Problem 5.

a)

If P = $100

Qd = 1200

Qs = 1500

Qd < Qs Surplus

Surplus = Qs – Qd = 1500 – 1200 = 300 tickets

Supplier should lower the price of the tickets to increase the Qd

P

Q

D

P1

$100

Qd 1200

S

Graph of Market for Concert Admission Tickets

Qs 1500

Surplus 300 tickets

P

Q

D

P1

$100

Qd 1200

S

Graph of Market for Concert...