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the essentials of demand and supply
d. The director of Occidental’s athletic department claims that the increase in enrollment resulted from the football team’s NCAA Division I national championship. Is this claim reasonable? How would it show up in the new demand equation? 3.4 The market demand and supply equations for a commodity are QD = 50 - 10P QS = 20 + 2.5P a. What is the equilibrium price and equilibrium quantity? b. Suppose the government imposes a price ceiling on the commodity of $3.00 and demand increases to QD = 75 - 10P. What is the impact on the market of the government’s action? c. In a single diagram, illustrate your answers to parts a and b. 3.5 The market demand for brand X has been estimated as Qx = 1, 500 - 3Px - 0.05I - 2.5Py + 7.5Pz where Px is the price of brand X, I is per-capita income, Py is the price of brand Y, and Pz is the price of brand Z. Assume that Px = $2, I = $20,000, Py = $4, and Pz = $4. a. With respect to changes in per-capita income, what kind of good is brand X? b. How are brands X and Y related? c. How are brands X and Z related? d. How are brands Z and Y related? e. What is the market demand for brand X?
SELECTED READINGS Baumol, W. J., and A. S. Blinder. Microeconomics: Principles and Policy, 8th ed. New York: Dryden, 1999. Boulding, K. E. Economic Analysis, Vol. 1, Microeconomics. New York: Harper & Row, 1966. Case, K. E., and R. C. Fair. Principles of Macroeconomics, 5th ed. Upper Saddle River, NJ: Prentice Hall, 1999. Green, W. H. Econometric Analysis, 3rd ed. Upper Saddle River, NJ: Prentice-Hall, 1997. Gujarati, D. Basic Econometrics, 3rd ed. New York: McGraw-Hill, 1995. Marshall, A. Principles of Economics, 8th ed. London: Macmillan, 1920. Ramanathan, R. Introductory Econometrics with Applications, 4th ed. New York: Dryden Press, 1998. Samuelson, P. A., and W. D. Nordhans. Economics, 12th ed. New York: McGraw-Hill, 1985. Silberberg, E. The Structure of Economics: A Mathematical Analysis, 2nd ed. New York: McGraw-Hill, 1990.
