econ 2012
PROBLEM SET 1
Name: ______________________________________________
Problem Set 1 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 2.
1. Based on the information provided for the market for video games, answer the following questions.
PRICE Q DEMANDED Q SUPPLIED
$50 5 9
$45 7 7
$40 9 5
$35 11 3
$30 13 1
a.) Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).
b.) What is the equilibrium price and quantity?
a.)
b.) PRICE: ___$45___________________ QUANTITY: ____7__________________
Now, assume that a new government report claims that video game play stimulates the brain.
c.) What will this do to the demand curve? Of the available list of things in the text that causes a change in demand, which best fits here as the cause of the demand shift?
d.) What will happen to the equilibrium price and quantity?
c.) The “New government report” may cause preference and taste differences.
d.) P: It should go up. Q: It should also go up.
2. Based on the following information for the state of Montana,
a. Draw the Production Possibilities Curve.
b. Determine the opportunity costs for a move from A to B; B to C; and C to D.
CHOICE OIL / barrels WHEAT / bushels
A 5000 0
B 4500 10000
C 2500 20000
D 0 25000
a.)
b.) A to B: 500 fewer barrels of oil from A to B.
B to C: 2,500 barrels of oil from B to C.
C to D: _________________
3. In the space provided you are to do a number of things:
a. Draw and properly label a demand and supply curve.
b. Indicate where the equilibrium Price and Quantities are located.
c. How do things change based on the following scenario?
• The market for hybrid cars is changing. There are more providers but due to bad publicity and poor performance, demand is falling.
Knowing this information, you need to first tell me, and then show this in
Name: ______________________________________________
Problem Set 1 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 2.
1. Based on the information provided for the market for video games, answer the following questions.
PRICE Q DEMANDED Q SUPPLIED
$50 5 9
$45 7 7
$40 9 5
$35 11 3
$30 13 1
a.) Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).
b.) What is the equilibrium price and quantity?
a.)
b.) PRICE: ___$45___________________ QUANTITY: ____7__________________
Now, assume that a new government report claims that video game play stimulates the brain.
c.) What will this do to the demand curve? Of the available list of things in the text that causes a change in demand, which best fits here as the cause of the demand shift?
d.) What will happen to the equilibrium price and quantity?
c.) The “New government report” may cause preference and taste differences.
d.) P: It should go up. Q: It should also go up.
2. Based on the following information for the state of Montana,
a. Draw the Production Possibilities Curve.
b. Determine the opportunity costs for a move from A to B; B to C; and C to D.
CHOICE OIL / barrels WHEAT / bushels
A 5000 0
B 4500 10000
C 2500 20000
D 0 25000
a.)
b.) A to B: 500 fewer barrels of oil from A to B.
B to C: 2,500 barrels of oil from B to C.
C to D: _________________
3. In the space provided you are to do a number of things:
a. Draw and properly label a demand and supply curve.
b. Indicate where the equilibrium Price and Quantities are located.
c. How do things change based on the following scenario?
• The market for hybrid cars is changing. There are more providers but due to bad publicity and poor performance, demand is falling.
Knowing this information, you need to first tell me, and then show this in