ECON101
Assignment 1
Q1 (20 points)
What do you think are these two graphs below?
Explain their economic meaning.
What is the similarity between them?
What makes them different?
Q2 (30 points)
The computer market in recent years has seen many more computers sell at much lower
prices. What shift in demand or supply is most likely to explain this outcome? Sketch a
demand and supply diagram and explain your reasoning for each.
1.
2.
3.
4.
A rise in demand
A fall in demand
A rise in supply
A fall in supply
Q3 (30 points)
Table 3.9 illustrates the market's demand and supply for cheddar cheese.
(1) Using Excel to graph the data and estimate the equilibrium.
(2) Next, create a table showing the change in quantity demanded or quantity supplied and a
graph of the new equilibrium in each of the following situations:
a. The price of milk, a key input for cheese production, rises, so that the supply decreases by
80 pounds at every price.
b. A new study says that eating cheese is good for your health, so that demand increases by
20% at every price.
Price per Pound ($)
Qd
3.00
3.20
3.40
3.60
3.80
4.00
Qs
750
730
700
650
600
500
540
580
620
680
700
730
Table 3.9
Q4 (20 points)
Most government policy decisions have winners and losers. What are the effects of raising
the minimum wage? It is more complex than simply producers lose and workers gain. Who
are the winners and who are the losers, and what exactly do they win and lose? To what
extent does the policy change achieve its goals?