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Demand and Supply Analysis of Fridges

This document contains an individual assignment submission that includes: 1. Multiple choice questions and their answers 2. An economics exercise involving supply and demand curves for refrigerators. It calculates the equilibrium price and quantity under different scenarios, including the effect of a tax or subsidy on refrigerators. 3. Predictions about how changes in personal income tax rates, steel prices, and technology and the economy would shift supply and demand curves and affect equilibrium price and quantity for motorcycles.

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Phương Huyền Hoàng
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10 views3 pages

Demand and Supply Analysis of Fridges

This document contains an individual assignment submission that includes: 1. Multiple choice questions and their answers 2. An economics exercise involving supply and demand curves for refrigerators. It calculates the equilibrium price and quantity under different scenarios, including the effect of a tax or subsidy on refrigerators. 3. Predictions about how changes in personal income tax rates, steel prices, and technology and the economy would shift supply and demand curves and affect equilibrium price and quantity for motorcycles.

Uploaded by

Phương Huyền Hoàng
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Hoàng Phương Huyền

Nộp bài cá nhân

Multiple choice

1.C 2.A 3.C 4.C 5.B 6.A 7.C 8.C 9.B

Assignment

Exercise 1:

1.

– Demand equation: Qd=f(P); P = a – bQd -Supply equation: Qs = f(P); P = c + dQs

+ At Qd = 0, P = a = 300 ($/unit) + At Qs = 0, P = c = 40 ($/unit)

+ b = (200-100)/(1000-500) = 0.2 + d = (200-100)/(800-300) = 0.2

 P = 300 – 0.2Qd  P = 40 + 0.2Qs

-Equilibrium price and equilibrium quantity for fridge : Qd = Qs

+ 300 – 0.2Qd = 40 + 0.2Qs Qd = Qs = 650 (units) => equilibrium quantity = 650 (units)

 Equilibrium price = 170 ($/unit)

Demand and Supply of Fridge


1200

1000 1000
900
800 800 800
Quantity

700 700
600 600 600
500 500
400 400
300
200

0
100 120 140 160 180 200
Price ($/unit)

Quantity Demanded (units) Quantity Supplied

2. The surplus and shortage of fridge at the price of $200 and $110 :

- At price $200 the surplus of fridge surfaces with 800 – 500 = 300 units

- At $110 the shortage is 950 – 350 = 600 units


Hoàng Phương Huyền
Nộp bài cá nhân

3. - Suppose the supply of fridge is constant, the increase in price of electricity will cause the demand for
fridge to decrease. Because this increase is considered a non-price factor (price of complementary
goods, since we need electricity to run a fridge)

- Suppose the quantity demanded for fridge change 300 units at each price level, we have the new
curves :

Chart Title
1400

1200

1000
Quantity

800

600

400

200

0
100 120 140 160 180 200
Price

Quantity Supplied Quantity Demanded


Quantity Demanded minus 300 units Quantity Demanded plus 300 units

+ Quantity Demanded minus 300 units, new equilibrium price and quantity are 140$/unit and 500units

+ Quantity Demanded plus 300 units, new equilibrium price and quantity are 200$/unit and 800units

4. Suppose government imposes a tax of $ 10 per one units of fridge sold :

=> Price will be increased by 10$/unit => Qs (non-price factor)

- The new supply function : P = 40 + 10 + 0.2Qs’ => Qs’ = 5P – 250

- New equilibrium price and new equilibrium quantity for fridge : Qs’ = Qd  5P – 250 = 1500 – 5P

=> New equilibrium price and quantity is 175$/unit and 625units

5. Suppose government supports for the sellers the amount of $ 10 per one units of fridge sold :

=> Price will be declined by 10$/unit => Qs (non-price factor)

- The new supply function : P = 40 – 10 + 0.2Qs’’ => Qs’’ = 5P – 150

- New equilibrium price and new equilibrium quantity for fridge : Qs’’ = Qd  5P – 150 = 1500 – 5P

=> New equilibrium price and quantity is 165$/unit and 675units


Hoàng Phương Huyền
Nộp bài cá nhân

Exercise 2

1. An increase in Vietnamese personal income tax rates => the demand curve for motor cycles will shift
to the left => the equilibrium price and quantity

2. An increase in the price of steel => the supply and demand curve remain unchanged but the
equilibrium point changed to be higher and to the left => the equilibrium price and quantity

3. An improvement in technology in motor vehicle production at the same time as a recession hits the
Vietnamese economy => the supply curve will shift to the right => the equilibrium price and quantity

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