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Economics Homework Two - Model (view source)
Revision as of 22:03, September 17, 2009
, 22:03, September 17, 2009setting up model answers
1. The supply of a good, and the demand for that good, determine both the ______ and ______ at which the good is sold (assuming it is a free market).
:
2. Suppose the price demand curve for a particular good is P = $30 - Q, where P is the price and Q is the quantity. Also suppose the price supply curve is P = $6 + Q. At which price and quantity will the good be sold (assuming a free market)?
:
3. When the '''''supply''''' of a good or service increases, such as increasing the number of oil wells, what happens to the market price of oil? Explain. When the '''''demand''''' for a good a good or service increases, such more people driving cars that need gasoline (refined oil), what happens to the market price of oil? Explain.
:
4. Why do grocery stores lower the price of their fruit (such as grapes) when they have an oversupply of ripened fruit? Explain by citing the downward slope of a demand curve, and describe what happens to this fruit after the grocery store lowers its price.
:
5. When the New York Yankees built their new $1.5 billion ballpark, they made a decision about how many "obstructed view" bleacher seats to include. Due to the design of this new stadium, people sitting in these bleacher seats could not see all of the field because part of the stadium structure blocks part of their view. Here is what the supply and demand are for those obstructed-view seats:
{| class="wikitable"
|-
|Quantity of "Obstructed-View" Tickets
|Demand Price/Ticket
|Supply Price/Ticket
|-
|300
|$10
|$3
|-
|600
|$5
|$5
|-
|900
|$3
|$7
|-
|1000
|$2
|$9
|-
|}
(A) How many "obstructed view" bleacher seats did the New York Yankees build, based on the above data, and how much does the team make from sales of these tickets at each game?
<br>(B) Suppose the City of New York passed a law for a maximum price (a "price control") of $2 per "obstructed view" bleacher ticket. Will the obstructed-view seats sell out under this law, and will people have to wait in line in order to buy them? Would you oppose or support such a law, and why?
:
6. "Time is money." Explain. Or, as an alternative, improve on our definition of a "free market." Or, as a third alternative, explain how the free market is so much powerful than even the wealthiest people in the world.
:
7. Explain ''why'' waiting lists develop in countries (like Canada and England) where the government prohibits anyone from charging more than fixed prices for medical services, assuming that these fixed prices are lower than what the prices would be under supply and demand in the free market. (Hint: the reason is related to the effect of price controls on the ''supply'' of a good or service.)
:
===Honors===
Write an essay of about 300 words total on one or more of the following topics:
8. Discuss the effect of supply and demand and the Tyndale Bible.
:
9. Relate the supply and demand curves to the basic economic concept of scarcity. For a good that has no scarcity, such as air, are there any supply and demand curves that are meaningful? Discuss.
:
10. Discuss any aspect of the economics of health care.
:
11. How are the forces of supply and demand and the free market helpful to someone who might otherwise be an social outcast and victim of prejudice in a community? In addition or alternatively, discuss the social benefits of a "free market" more generally.
:
12. Compare "equilibrium" in economics to "equilibrium" in other fields (such as chemistry or physics) or in life itself (such the flow of traffic on highways), using specific examples.
:
:
2. Suppose the price demand curve for a particular good is P = $30 - Q, where P is the price and Q is the quantity. Also suppose the price supply curve is P = $6 + Q. At which price and quantity will the good be sold (assuming a free market)?
:
3. When the '''''supply''''' of a good or service increases, such as increasing the number of oil wells, what happens to the market price of oil? Explain. When the '''''demand''''' for a good a good or service increases, such more people driving cars that need gasoline (refined oil), what happens to the market price of oil? Explain.
:
4. Why do grocery stores lower the price of their fruit (such as grapes) when they have an oversupply of ripened fruit? Explain by citing the downward slope of a demand curve, and describe what happens to this fruit after the grocery store lowers its price.
:
5. When the New York Yankees built their new $1.5 billion ballpark, they made a decision about how many "obstructed view" bleacher seats to include. Due to the design of this new stadium, people sitting in these bleacher seats could not see all of the field because part of the stadium structure blocks part of their view. Here is what the supply and demand are for those obstructed-view seats:
{| class="wikitable"
|-
|Quantity of "Obstructed-View" Tickets
|Demand Price/Ticket
|Supply Price/Ticket
|-
|300
|$10
|$3
|-
|600
|$5
|$5
|-
|900
|$3
|$7
|-
|1000
|$2
|$9
|-
|}
(A) How many "obstructed view" bleacher seats did the New York Yankees build, based on the above data, and how much does the team make from sales of these tickets at each game?
<br>(B) Suppose the City of New York passed a law for a maximum price (a "price control") of $2 per "obstructed view" bleacher ticket. Will the obstructed-view seats sell out under this law, and will people have to wait in line in order to buy them? Would you oppose or support such a law, and why?
:
6. "Time is money." Explain. Or, as an alternative, improve on our definition of a "free market." Or, as a third alternative, explain how the free market is so much powerful than even the wealthiest people in the world.
:
7. Explain ''why'' waiting lists develop in countries (like Canada and England) where the government prohibits anyone from charging more than fixed prices for medical services, assuming that these fixed prices are lower than what the prices would be under supply and demand in the free market. (Hint: the reason is related to the effect of price controls on the ''supply'' of a good or service.)
:
===Honors===
Write an essay of about 300 words total on one or more of the following topics:
8. Discuss the effect of supply and demand and the Tyndale Bible.
:
9. Relate the supply and demand curves to the basic economic concept of scarcity. For a good that has no scarcity, such as air, are there any supply and demand curves that are meaningful? Discuss.
:
10. Discuss any aspect of the economics of health care.
:
11. How are the forces of supply and demand and the free market helpful to someone who might otherwise be an social outcast and victim of prejudice in a community? In addition or alternatively, discuss the social benefits of a "free market" more generally.
:
12. Compare "equilibrium" in economics to "equilibrium" in other fields (such as chemistry or physics) or in life itself (such the flow of traffic on highways), using specific examples.
: