Homework #1, Econ 611, Prof. Hanson

  1. A set of people who want to buy a certain product have these marginal values:  55,30,75,95,40,60,65,35,100,50,85,70,90,80,45.   Another set of people want to sell this same product and have these marginal costs:  80,20,50,40,90,10,30,0,60,70.    Graph the supply and demand curves for this product and find the intersecting quantity and price for this product.
  2. The demand by professors for student research assistants is given by  Q = (100-P)/3  while the demand by students to be research assistants is given by Q = 60-P.  In equilibrium how many research assistants are there and which side pays the other how much?
  3. Describe the effect of each of these changes on the price and quantity of the market for janitors: a.     The invention of a $10 million robot, which can replace a janitor in cleaning buildings. b.    Better filters to prevent dust from entering and circulating in buildings. c.     Allowing easier immigration of workers from Haiti. d.     An increase in the average size of offices.

Each morning the demand for donuts at the JC is given by  Q = 20 10 P, while the supply is given by Q = 30P.   P is the price in dollars and Q is the number of donuts. 

  1. What is the competitive equilibrium quantity and price? 
  2. What if a tax of $0.50 per donut were imposed?  a.       If the tax were paid by donut sellers, what would be the new demand curve?  By how much would the quantity and price change?  b. If the tax were paid by donut buyers, what would be the new demand curve?  By how much would the quantity and price change? 
  3. What if a law were passed requiring donuts be sold for no less than some minimum price? a.       What is the price and quantity if the minimum price is $0.25? b.      What is the price and quantity if the minimum price is $1.00?
  4.   Here is the supply and demand for movies in Fairfax and Arlington. 

 

Fairfax

 

Arlington

 

Price

Q Demand

Q Supply

Q Demand

Q Supply

1

9

1

14

10

2

8

2

12

12

3

7

3

10

14

4

6

4

8

16

5

5

5

6

18

6

4

6

4

20

7

3

7

2

22

a.       Find the price and quantity of movies in each city, assuming people in each city are only allowed to watch movies in their city. b.      Find the price and quantity of movies in each city, assuming people in each city are allowed to watch movies in whatever city they choose. c.       In this second case, what quantity of people travel from one city to the other to watch movies?  Which city do they travel to?