Assignment #1 Microeconomics Supply and Demand.
Luz Amparo Osorio Martínez (1920146)
University Canada West
Professor Shirley Tang
MBAF 504: Economics from a Business Perspective
November 2, 2020
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MBAF504 Assignment #1 Microeconomics Supply and Demand
1. What feature of the world market for crude oil make it a competitive market?
Answer:
The main feature of the world market for crude oil that make it a competitive market is
its buyers and sellers because there are so many of them and apart from that they can
not influence the price so that makes it a very competitive market.
2. The money price of a textbook is $90 and the money price of the Wii game Super
Mario Galaxy is $45.
a. What is the opportunity cost of a textbook in terms of the Wii game?
b. What is the relative price of the Wii game in terms of textbooks?
Answer:
a. The opportunity cost of a textbook in terms of Wii games is 2 Wii games per textbook
b. The relative price of the wii game is 1/2 of a textbook per wii game.
3. Consider the initial effect of each of the following events on the underlined market.
First indicate what the shifter (or external shock) is.
Use an ARROW to show whether there is an increase or decrease in demand (D) or
supply (S), and equilibrium price (P), equilibrium quantity (Q).
Use the space provided to graph the appropriate shifts or movements.
Be sure to label the axis, curves and equilibrium points.
An example illustrated here.
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3.1 Ipad5: Research is published that proves Ipad5s cause cancer.
(Hint: Ipad5 and Ipad5s are related goods)
Answer:
Demand is going to reduce because some people will stop buying Ipad5s since they are afraid
they might get cancer because of if.
Increasing:
Decreasing:
- Demand
- Supply
- Equilibrium price
- Equilibrium quantity
3.2 Ipad5: Tsunami in Japan and floods in Thailand hurt production of Ipad5s.
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(Hint: Ipad5 and Ipad5s are related goods)
Answer:
This natural disaster will alter the regular volume of production of Ipad5s.
Increasing:
+ Demand
+ Equilibrium price
Decreasing:
- Supply
- Equilibrium quantity
3.3. Beef: The price of grass (cattle food) rises due to dry weather (drought).
Answer:
4
Prices in general will go higher because of the rise on the price of grass.\
Increasing:
+ Equilibrium price
Decreasing:
- Supply
- Equilibrium quantity
(Demand remain stable)
3.4. Beef: An outbreak of the disease Listeria is linked to pork.
Answer:
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People will start to switch from pork to beef because they will get scared of the disease’s news
and will consume more beef instead.
Increasing:
+ Demand of beef.
+ Equilibrium price.
+ Equilibrium quantity.
Decreasing:
(supply will be the same)
3.5. World Wheat: World population is growing by over 2 million people per week.
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Answer:
If the population is growing then the quantity of wheat consumed will increase too.
Increasing:
+ Demand of wheat.
+ Equilibrium of price.
+ Equilibrium of quantity.
Decreasing:
( Supply remains the same)
3.6. World Wheat: Weather destroys wheat crop in Canada and the US.
Answer:
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Because of weather issues the regular supply of wheat will decrease.
Increasing:
+Equilibrium of price
Decreasing:
- Supply of wheat.
- Equilibrium of quantity.
(Demand of wheat remains stable).
3.7 Hand Sanitizer: An outbreak of Covid-19
Answer:
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The COVID-19 pandemic has motivated an increase of the demand of hand sanitizer
because people want to prevent to get the virus.
Increasing:
+ Demand of Hand Sanitizer.
+ Equilibrium of price.
+ Equilibrium of quantity.
Decreasing:
(Supply is stable for this specific case).
