Econ 98-Chiu
Quiz 2: Demand & Supply | PPF
Name & SID:
Spring 2005
Date:
You have 10 minutes to answer the following questions. Please show all your work and circle
your final answers. NO CALCULATORS.
1. The following is the market demand (D) for oranges. What happens to the demand for
oranges when the price of oranges increases from $2 to $4? [ 5 points ]
P
4
2
D
1
4
Q
2. Assume the demand for oranges is linear. Derive the demand equation. Use the points from
Question 1. [5 points]
3. The price of apples increases. Graphically show what happens to the market for oranges in
Question 1. Clearly label any shifts and any new curves in the market for oranges. [5 points]
4. What happens to the market equilibrium price and quantity of oranges after the price of
apples increases. Assume the supply curve is upward sloping. [3 points]
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Econ 98-Chiu
Quiz 2: Demand & Supply | PPF
Name & SID:
Spring 2005
Date:
5. William lives on an isolated island. He makes a living by picking coconuts or fishing. He
works 10 hours a day. In an hour, he can either pick 10 coconuts or catch 20 fish. Graph the
production possibilities frontier (PPF) for William in a given day. Be precise whenever
possible. Assume constant opportunity costs. Plot fish on the vertical axis and coconuts on
the horizontal axis. [10 points]
6. Each day, William consumes twice as many fish as coconuts. How many fish and coconuts
does William consume a day? [10 points]
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