Supply and Demand and New Housing

Introduction to Microeconomics downslope 2012 Assignment 1 due on October 4 in split up (Total 80 points) Q1. (15 points) The following table shows production possibilities for twain itemschairs and tables. Combination 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 fortune live of producing the first 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 one-sixth table? 8-0)/1=8 (d) Draw the production-possibilities curve for chairs and tables on a graph, 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 change? (f) If a more efficient method 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 following table describes the production possibilities of two cities. Red SweatersPer Worker per Hour Blue SweatersPer Worker per Hour Montreal 3 3 Toronto 2 1 (a) Without manage, what is the terms of blue sweaters (in terms of deprivation sweaters) in Montreal? What is the price in Toronto? (b) Which city has an absolute advantage in the production of each colour of sweater? Which city has a relative advantage in the production of each colour of sweater? (c) If the cities trade with each other, which colour of sweater will each export? (d) What is the spew of prices at which trade can occur? Q3. 10 points) Canada has a entangled economic system, in which both marketplace and g everywherenment play a role. For each of the following situation, explain why you think that it would be scoop up dealt with by the market, or by government action. (a) There atomic number 18 alike many an(prenominal) restaurants in a town, and several are losing money. (b) The gap amongst the rich and the poor is very wide, and the poorest citizens are unable to afford even off the bare necessities of life. (c)The largest supermarket chain in the country is planning to buy the second-largest chain, which would go past it a near-monopoly in many communities. d) A trend toward healthier consume has driven the price of chicken up so sharply that many consumers are complaining to the government about the increased prices. (e) Several manufacturers are cutting costs by dumping waste into a topical anesthetic river. Q4. (5 points) A customer is about to buy 4 shirts at $20 each. When she finds that they have just gone on sale for $15, she buys 5 shirts instead. Is her direct for these shirts elastic or inelastic? Explain the reason for your answer. Q5. (10 points) From 1997 to 2001, the price of deep brown on world markets fell from $1. 60 U. S per pound to $0. 6 U. S. per pound a decrease of 65 percent. (a) What is the most logical report for such a decrea se in price? (b) What explains the large sizing of the price decrease? (c)Draw a graph representing the factors in (a) and (b). Q6. (10 points) Assume the hold schedule for ice-cream cones can be represented by the equation QD=160-3P, where QD is the metre strikeed and P is the price. The supply schedule can be represented by QS=140+7P, where QS is the step supplied. (a) Calculate the equilibrium price and measure in the market for ice-cream cones. (b) The Canadian railroad tie f Ice-Cream Eaters complains that the equilibrium price measured in part (a) is too high, and their members cannot eat enough ice-cream cones at this price. They student residence the government to impose a price ceiling on ice-cream cones of $1. What is the quantity demanded at this price? The quantity supplied? Is there a shortage or surplus of ice cream? How big is it? What if a $2. 50 price ceiling was imposed instead? (c) Say instead that the Canadian Association of Ice-Cream Makers lobbies the go vernment, arguing that the equilibrium price is too low for their members to make a decent living.They want a price infrastructure 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 impertinently admit. The statistics do not show the actual price of housing in dollars, but rather an index of prices that is set at 100. 0 in 2007, with the index in each year after 2007 showing how often prices have increased since 2007.To see how the price of new housing has changed over the past 5 years, visit the Statistics Canada website at http//www. statcan. gc. ca/tables-tableaux/sum-som/l01/cst01/manuf12-eng. htm, and search for newfound housing price index for Canada. Calculate the percentage increase in new housing prices each year over the past basketball team yea rs (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 side or supply side factors might explain these?