NEW ERA COLLEGE April 2013 session ECON101D Assignment

Submission date : 21 May 2013 at 11.00 am (in lecture hall) Question 1 Suppose the market demand for pizza is given by QD = 300 20p and the market supply for pizza is given by QS = 20P 100, where P = price (per pizza). a. Graph the supply and demand schedules for pizza using $5 though $15 as the value of P. b. In equilibrium, how many pizzas would be sold and what price? c. What would happen if suppliers set the price of pizza at $15? Explain the market adjustment process. d. Suppose the price of hamburgers, a substitute for pizza, doubles. This leads to doubling of the demand for pizza (at each price consumers demand twice as much pizza as before).Write the equation for the new market demand for pizza. e. Find the new equilibrium price and quantity of pizza. Question 2 Fill in the missing amount in the following table: % change in price Demand for Ben & Jerrys Ice cream Demand for beer at San Francisco 49ers football games Demand for Broadway theater tickets in New York Supply of Chickens Supply of beef cattle +10% % change in quantity demanded -12% Elasticity

a.

-20%

b.

-0.5

c.

-15%

-1.0

+10% -15%

d. -10%

+1.2 e.

f. Would you recommend the Ben & Jerrys move forward with a plan to raise prices if the companys only goal is to increase revenue? g. Would you recommend that beer stands cut prices to increase revenues at 49ers games next year?