Supply and Demand and New Housing

Introduction to Microeconomics Fall 2012 appellative 1 due on October 4 in class (Total 80 points) Q1. (15 points) The avocation table extracts production possibilities for two itemschairs and tables. combine Chairs Tables A 0 6 B 8 5 C 15 4 D 21 3 E 26 2 F 30 1 G 33 0 (a) What is the luck cost of producing the out strike out table? (33-30)/1=3 (b) What is the opportunity cost of producing the third table? (26-21)/1=5 (c) What is the opportunity cost of producing the sixth table? 8-0)/1=8 (d) hook shot the production-possibilities curve for chairs and tables on a chart, placing tables on the vertical axis and chairs on the horizontal axis. (e) If the economy achieved greater efficiency in the production of tables, how would the production possibilities curve modify? (f) If a to a greater extent efficient manner of producing chairs were developed, how would the curve change? (g) Suppose more economic resources (labour, materials, and capital) became available. How would the curve change?Q2. (15 points) The undermentioned table describes the production possibilities of two cities. bolshie SweatersPer player per Hour Blue SweatersPer Worker per Hour Montreal 3 3 Toronto 2 1 (a) Without trade, what is the bell of blue jumpers (in ground of red sweaters) in Montreal? What is the price in Toronto? (b) Which city has an absolute prefer in the production of for each one glossing material of sweater? Which city has a comparative advantage in the production of each colour of sweater? (c) If the cities trade with each other, which colour of sweater will each exportation? (d) What is the range of prices at which trade substructure occur? Q3. 10 points) Canada has a flux economic system, in which both grocery and goernment play a role. For each of the following situation, explain why you return that it would be best dealt with by the market, or by government action. (a) There argon too more restaurants in a town, and several argon losing money. (b) T he gap surrounded by the rich and the poor is very wide, and the poorest citizens are unable to afford even the extra necessities of life. (c)The largest supermarket chain in the country is adding to buy the second-largest chain, which would give it a near-monopoly in m each communities. d) A impetus toward healthier eating has driven the price of fearful up so sharply that many consumers are complaining to the government more or less the increase prices. (e) Several manufacturers are stark costs by dumping desolate into a local river. Q4. (5 points) A client is about to buy 4 shirts at $20 each. When she finds that they have just gone(p) on sale for $15, she buys 5 shirts rather. Is her hold for these shirts elastic or inelastic? rationalize the reason for your answer. Q5. (10 points) From 1997 to 2001, the price of coffee on world markets fell from $1. 60 U. S per pound to $0. 6 U. S. per pound a reduce of 65 percent. (a) What is the most transparent explanation fo r such a decrease in price? (b) What explains the large coat of the price decrease? (c)Draw a graph representing the factors in (a) and (b). Q6. (10 points) Assume the posit chronicle for ice-cream cones can be delineate by the equation QD=160-3P, where QD is the amount of money demanded and P is the price. The supply schedule can be represented by QS=140+7P, where QS is the quantity supplied. (a) play the sense of balance price and quantity in the market for ice-cream cones. (b) The Canadian Association f Ice-Cream Eaters complains that the equilibrium price calculated in part (a) is too high, and their members cannot eat seemly ice-cream cones at this price. They lobby the government to enforce a price detonator on ice-cream cones of $1. What is the quantity demanded at this price? The quantity supplied? Is at that place a shortage or surplus of ice cream? How adult is it? What if a $2. 50 price ceiling was oblige instead? (c) Say instead that the Canadian Association of Ice-Cream Makers lobbies the government, arguing that the equilibrium price is too low for their members to contact a decent living.They want a price floor of $3 per cone. What is the quantity demanded at this price? The quantity supplied? Is there a shortage or a surplus of ice cream? What is it? What if a price floor of $1. 50 was imposed instead? Q7. (15 points) One of the key prices Statistics Canada monitors is the price of raw hold. The statistics do not show the actual price of housing in dollars, but rather an index number of prices that is set at 100. 0 in 2007, with the index in each year by and by 2007 showing how much prices have increased since 2007.To see how the price of bleak housing has changed over the past 5 years, natter the Statistics Canada website at http//www. statcan. gc. ca/tables-tableaux/sum-som/l01/cst01/manuf12-eng. htm, and search for impudent housing price index for Canada. channelize the percentage increase in new housing prices each yea r over the past five years (2007-2011). What trend do you see in new housing prices for Canada (national average level), and is there any noticeable trend for the Metropolitan areas? What demand typeface or supply side factors might explain these?