Econ 1201. Fall 2018 Assignment #1

Econ 1201.1WW

                                                               

Fall 2018

 

Assignment #1

 

 

Assignments must be typed, with all calculations shown; diagrams can be hand drawn - - - insert your diagrams in the appropriate sections of your document.  To insert a diagram in Word, use the Insert tab and click on Pictures to upload the diagram.

 

Hand written assignments are not accepted.

 

Assignments must be submitted in the appropriate Dropbox on Brightspace either as a Word or pdf file. Email attachments are not accepted.

 

Note: Make sure your name and student number are included on your assignment.

 

Question 1. (Show all calculations)

Fill in missing amounts a-d in the table below. Parts (a) – (d) are each worth 2 marks

	% Change in Price	% Change in Quantity	Elasticity (η)
Demand for Hag Daz ice cream	+10%	-12%	a.
Demand for hot dogs at Moosehead hockey games	-20%	b.	-0.5
Demand for Neptune theatre tickets in Halifax	c.	-1.5%	-1.0
Supply of Lobster	+10%	d.	+1.2

 

Question 2

1. You decide to treat yourself and purchase one Cappuccino at Pavia Gallery Espresso Bar & Café each morning, regardless of the price of a Cappuccino. What does this say about your elasticity of demand for Cappuccino? Briefly explain your answer. [3 marks]
2. If consumer income increases by 10%, all else being equal, and the quantity of Hag Daz ice cream demanded increases by 14%, what is the income elasticity of demand for Hag Daz ice cream? Interpret your results. [3 marks]
3. In most cities’ taxicab fares are regulated. Taxicab drivers in Halifax obtain permission to raise their fares by 10% to increase their revenues - - - - the drivers anticipate their revenue would increase by 10% as a result. However, the 10% increase generated only a 5% increase in revenue. What can you conclude about the elasticity of demand for taxicab rides?  What were taxicab drivers assuming about the elasticity of demand for taxicab rides?  Interpret your results. [3 marks]

 

 

 

Question 3.

 

The province of Nova Scotia introduced the $12 million vineyard and wineries investment program in 2014 to help grow the wine industry. In 2017, the wine industry in Nova Scotia employed roughly 640 people directly and brought in $17.5 million in sales. (https://www.cbc.ca/news/canada/nova-scotia/ns-vineyards-growing-rapidly-1.4566637)

 

With the aid of appropriate diagrams, explain in words how each of the following separate events would impact the wine market in Nova Scotia.  What will be the effect on equilibrium price and quantity as compared to the initial equilibrium? Explain your answers by stating which curve(s) move and why.

Use a separate diagram in each situation. Make sure you label and identify all relevant points the diagrams: the initial supply and demand curves must be identified in addition to the curve(s) that shift and the initial and new equilibrium price and quantity. (The demand and supply curves have their usual shapes)

 

1. Nova Scotia wines have received numerous awards in recent years and clever advertising campaigns have been launched which has encouraged the consumption of Nova Scotia wines.

 

1. Each year, the number of hectares of land in the province agricultural heartland being used to grow grapes is increasing.

 

1. Events (a) and (b) occur simultaneously.

 

Parts (a) – (c) are each worth 4 marks. (Two marks for written answers, two marks for diagrams)

 

Question 4.

 

Suppose the market demand and supply curves are represented by the following equations:

 

Qd = 600 – 60P

 

Qs = -30 +30P

 

1. Determine the equilibrium price and quantity. (Show your calculations) [2 marks]

 

1. Illustrate these curves on a graph, labelling the curves, intercepts and equilibrium price and quantity. [2 marks]