ECON252 Macroeconomics - Suppose that the price of basketball tickets

Summer 2020 – Individual Assignment 1 – (15%)

ECON252 – Macroeconomics- O1

Problem 1: (30 points)

Suppose that the price of basketball tickets at your college is determined by market forces. Currently, the demand and supply schedules are as follows:

Price Quantity Demanded Quantity Supplied

$4.00 10000 8000

$8.00 8000 8000

$12.00 6000 8000

$16.00 4000 8000

$20.00 2000 8000

a. Draw the demand and supply curves. What is unusual about this supply curve? Why might this be true? b. What are the equilibrium price and quantity of tickets? c. Your college plans to increase total enrollment next year by 5,000 students. The additional students will have the following demand schedule:

Price Quantity Demanded

$4.00 4000

$8.00 3000

$12.00 2000

$16.00 1000

$20.00 0

What will be the new equilibrium price and quantity?

 

Problem 2: (30 points)

The market for pizza has the following demand and supply schedules:

Price Quantity Demanded

Quantity Supplied

$4.00 135 26

$5.00 104 53

$6.00 81 81

$7.00 68 98

$8.00 53 110

$9.00 39 121

a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market? b. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium? c. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium?.

 

 

Problem 3: (20 points)

The average of price of Toyota is 4500 KD, the aberage price of Rolls Royce is 450000 KD. Use

the Supply and Demand to Analyze why the price of these two cars are different.

 

 

Problem 4: (20 points)

Does a change in consumers’ tastes lead to a movement along the demand curve or a shift in

the demand curve? Does a change in price lead to a movement along the demand curve or a

shift in the demand curve?