Consider the market for minivans. For each of the events listed here, identify the effect on the equilibrium price and equilibrium quantity of minivans (note: the answer should be increase, decrease, stay the same, or indeterminate.).

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AUM: 500101: Microeconomics

Assessment 1:  20%

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Student’s Number:

Section 1 is M/W

 

1.       Consider the market for minivans. For each of the events listed here, identify the effect on the equilibrium price and equilibrium quantity of minivans (note: the answer should be increase, decrease, stay the same, or indeterminate.).

 

Fill up the following answer sheet for Question 1: (note: the answer should be increase, decrease, stay the same, or indeterminate.).

 

equilibrium price

equilibrium quantity

a.       People decide to have more children.

.          

 

 

b.   A strike by steelworkers raises steel prices.

 

 

 

c.   Engineers develop new automated machinery for the production of minivans.

 

 

 

d.   The price of station wagons rises.

 

 

 

a.      A stock-market crash lowers people’s wealth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

PRICE in $

QUANTITY DEMANDED

QUANTITY SUPPLIED

4

135

26

5

104

53

6

81

81

7

68

98

8

53

110

9

39

121

 

 

Question 2: Fill up the following answer sheet

 

a.       What is the equilibrium price in this market?

 

 

b.      What is the equilibrium quantity in this market?

 

 

c.       At price of $4 do you have shortage or surplus?

 

 

d.      At price of $8 do you have shortage or surplus?

 

 

 

 

3.       Now suppose that the hot weather and the food and drug administration shut down many ice cream shops.  These two events occur at the same time. Analyze the effect of this combination of events on (note: increase, decrease, stay the same, or indeterminate.)

 

 

Fill up the following answer sheet

Question 3: (note: the answer should be increase, decrease, stay the same, or indeterminate.).

 

a.       What will happen to the equilibrium price in this market?

 

 

b.      What will happen to the equilibrium quantity in this market?

 

 

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