EKN 3101 GAYA CARA PEMIKIRAN EKONOMI ASSIGNMENT 1 (THE MARKET FORCES OF SUPPLY AND DEMAND) SARJANA MUDA

PENGURUSAN (PEMASARAN) LECTURER: PUAN HASLINDA GROUP MEMBERS VIKENASWARY GUNASEGAR UK 16464 CHEAH JUN HWA UK 16508 NORSALEHA BINTI REMLAN UK16731 NOR AZIZAH BINTI YUSOF UK16752 LAU CYZIN UK16784 NUR AZLINDA BINTI ISMAIL UK16855 NORASHIKIN BINTI AZIZ UK17193

MICRO ECONOMIC 1) Explain each of the following statements using supply-and-demand diagrams. (a) When a cold snap hits Florida, the price of orange juice raises in supermarket throughout the country.

Price S2 S1 P2 P1
E2 E1

D1 0 Q2 Q1 Quantity

The figure show the orange juice market when demand and supply curve cross in the point of equilibrium at E1, where the price of the equilibrium is at P1 and the quantity of equilibrium at Q1. When the cold snap hits Florida, the supply for orange juice will of the weather. Through that, the supply curve will shift to the left from S1 to S2. Result is the price of the orange juice raises from P1 to P2 and the quantity of orange juice falls from Q1 to Q2 just because the needs for orange juice lesser.

(b) When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resort plummets.

Price S1 S2 P1 P2
E1 E2

D1 0 Q1 Q2 Quantity

This figure show the hotel rooms market in Caribbean resort where the demand and supply curve cross in the point of equilibrium at Q1. When the weather turns warm in New England every summer, the owner of the resort will decrease the price of the resort because of the season of vocation. Through that, the owner of the resort will supply more hotels rooms for vacationing people by moving the supply curve to the right from S1 to S2. Result this, the price for a hotel room falls from P1 to P2 and the quantity of the hotel room increase from Q1 to Q2 just to get more customer.

(c) When a war breaks out in the Middle East, the price of gasoline rises, and the price of a used Cadillac falls. Price of Cadillac S

E1 P E1 P1

D D1 Quantity of Cadillac Q1 Q

This figure show the Cadillac market at the equilibrium market of E where the equilibrium price is at P and the quantity of equilibrium is at Q. When the war break out in the Middle East, the price of gasoline rises and it effects the used of Cadillac (car) and its consider as compliments between this two things. Via that, the demand curve shift to the left where DD shift to D1. Result, new equilibrium at cross E where the price of Cadillac falls from P to P1 and the quantity of Cadillac falls from Q to Q1.

2)An increase in the demand for notebooks raises the quantity of notebooks demanded but not the quantity supplied. Is this statement true or false? Explain.

Price of notebook S1

E2 P2 P1 E1

D2 D1 0 Q1 Q2 Quantity of notebooks

FIGURE 1 It is true. The figure1 show the increase in the demand of notebook would cause a increase in the quantity demand for the notebook. Figure1 show the equilibrium of the notebook market where the demand and supply cross at point E1, the equilibrium price at P1 and the equilibrium quantity at Q1. An increase in the demand for notebook raises the quantity of notebooks demand. This can show where shift the demand curve to the right. The equilibrium price and the equilibrium quantity both rise. The demand curve shift from D1 to D2, which causes the equilibrium price to increase from P1 to P2 and the equilibrium quantity to increase from Q1 to Q2. This show the increase will happen at the quantity demand but not the quantity supplied because the demand curve shifted.

3) Consider the market for eggs. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether supply or demand increases or decreases. They draw a diagram to show the effect on the price and quantity of eggs. (a) The price of grains that fed to hens falls.

Price of eggs

S1 Supply, S2 P1 P2 S1 S2 0 Q1 Q2 E1 Equilibrium, E2 Demand, D1 Quantity of eggs

The figure show the eggs market where demand and supply curve cross in the point of equilibrium at E1, where the price of the equilibrium at P1 and the quantity of equilibrium at Q1. When the price of grains that fed to hens falls, raise more hens is profitable and firms supply more eggs later. It shift supply curve to the right where S1S1 to S2S2. Result, the price of an egg falls from P1 to P2 and the quantity of an eggs increase from Q1 to Q2 at the new equilibrium of E2.

(b) The price of bacon falls.

Price of eggs, P

D1 D2 Supply, S1

P1 P2 S1 0

Equilibrium, E1 E2 Demand, D1 D2 Q2 Q1 Quantity of eggs, Q

The figure show the eggs market where demand and supply curve cross in the point of equilibrium at E1, where the price of the equilibrium at P1 and the quantity of equilibrium at Q1. Bacon and eggs are the substitute. When the price of bacon falls, people would to start to move their food to bacon rather than eggs because price of bacon fall. Via that, it shift demand curve to the left from D1D1 to D2D2. Result, the price of eggs will fall from P1 to P2 and the quantity of eggs will falls from Q1 to Q2 at the new equilibrium of E2.

(c) A new study is release that indicates the eating eggs is hazardous to ones health.

Price of eggs, P

D1 D2 Supply, S1

P1 P2 S1 0

Equilibrium, E1 E2 Demand, D1 D2 Q2 Q1 Quantity of eggs, Q

The figure show the eggs market where demand and supply curve cross in the point of equilibrium at E1, where the price of the equilibrium at P1 and the quantity of equilibrium at Q1.When people start to notice that taking eggs is risky to ones health, they have to start to change their perception of taking lesser of eggs.Via that, it shift demand curve to the left from D1D1 to D2D2. Result, the price of eggs will fall from P1 to P2 and the quantity of eggs will falls from Q1 to Q2 at the new equilibrium of E2.

(d) The number of eggs-producing farms falls.

Price of eggs, P

D1

S2 Supply, S1

P2 P1 S2 S1 0 Q2

E2 Equilibrium, E1 Demand, D1 Quantity of eggs, Q Q1

The figure show the eggs market where demand and supply curve cross in the point of equilibrium at E1, where the price of the equilibrium at P1 and the quantity of equilibrium at Q1.When the number of eggs producing farms falls it make the supply curve shift to the left from S1S1 to S2S2. Result, the price of eggs increase from P1 to P2 because of the decrease of quantity of eggs from Q1 to Q2 at the equilibrium E2.

(e) This weekend is the Easter holiday. The

Price of eggs, P

figure where and curve in the of

show the eggs market

S1 E1 Supply, S2

D1

demand supply cross point

P1 P2 S1 S2 0 Q1 Q2 Demand, D1 Quantity of eggs, Q Equilibrium, E2

equilibrium at E1, where the price P1 of and the the equilibrium at

quantity of equilibrium at Q1.When that weekend is the Easter holiday, consumer need more eggs for that occasion. Via that, the demand curve shift to the right where D1D1 to D2D2.Result, the price of eggs increase from P1 to P2 where the quantity increases from Q1 to Q2 at the new equilibrium of E2.

7. Using supply- and- demand diagrams show the effect of the following events on the market for personal computers. a) The price of computer chips falls.

PPrice SS SS1

P P1

E E1

DD 0 Q Q1 Quantity

The equilibrium at this market at E1 where the price of the equilibrium is at P1 and the quantity of equilibrium is at Q1. When the price of computer chips falls, producing computer is profitable, and firm supply more computer. Via that, it shift the supply curve to the right where SS to S1 in the new equilibrium of E1. Result the price of computer will falls from P1 to P2 and the amount of the quantity increase from Q to Q1

b)There is a rise in consumer incomes.

P Price SS

P1 P E

E1

DD1 DD 0 Q Q1 Quantity

The equilibrium of this market at E1 where the price of equilibrium is at P1 and the quantity of equilibrium is at Q1.When the consumer incomes rises. Via that, consumer willing to buy more personal computer so it shift the demand curve from DD to DD1. Result ,the price of computer will raise from P1 to P2 and the amount of quantity will decrease from Q1 to Q2.

c) The price of computer software rises.

PPrice SS

P P1 E1

DD DD1 0 Q1 Q Quantity

The equilibrium of this market at E1 where the price of equilibrium is at P1 and the quantity of equilibrium is at Q1. When the price of computer software rises, the quantity of computer software is falls. It can effect to personal computer because the computer software and personal computer is compliments. Via that, the demand curve will move to the left from DD to D1D1. Result, the new equilibrium was stated at E1 where the price of computer false from P1 to P2 and the amount of quantity will decrease from Q1 to Q2.

d) Universities require incoming freshmen to have their own personal computer.

PPrice SS

P1 P E

E1

DD1 DD 0 Q Q1 Quantity

The equilibrium of this market at E1 where the price of the equilibrium is at P1 and the quantity of equilibrium is at Q1.When the universities require incoming freshmen to have their own personal computer, the demands for personal computer is increase. This is because the freshmen must buy their own personal computer. Demand will shift to the right from DD toD1 and the new equilibrium at E1. Result the price of computer increase from P1 toP2 and the amount of quantity will rise from Q1 toQ2.

12. Suppose that the price of basketball tickets at your college is determined by market force. Currently, the demand and supply schedule are as follow: Price RM 4 RM 8 RM 12 RM 16 RM 20 Quantity Demanded 10,000 Tickets 8,000 6,000 4,000 2,000 Quantity Supplied 8,000 Tickets 8,000 8,000 8,000 8,000

a) Draw the demand and supply curve. What is unusual about this supply curve? Why might this be true?

PRICE 20 16 12 8 4 0 2000 4000 6000 8000 10,000 QUANTITY

-The usual for this supply curve is inelastic. This might be true is no matter how much the price increase of the ticket, the quantity supplied still stay the some amount of 8,000 tickets.

b) What are the equilibrium price and quantity of tickets? The equilibrium price is RM 8 and the quantity of tickets is 8,000 units.

c) Your college plan to increase total enrollment next year by 5,000 students. The additional student will have the following demand schedule: Price RM 4 RM 8 RM 12 RM 16 RM 20 Quantity Demanded 4,000 Tickets 3,000 2,000 1,000 0

Now add the old demand schedule and the demand schedule for the new student the calculate the new demand schedule for the entire college. What will be the new equilibrium price and quantity? Price RM 4 RM 8 RM 12 RM 16 RM 20 Quantity Demanded 14,000 11,000 8,000 5,000 2,000 Quantity Supplies 8,000 8,000 8,000 8,000 8,000

-The new equilibrium of the price is of RM 12 where the quantity demand and supply is at 8,000 units.

13. Market research has revealed the following information about the market for pizza: The demand schedule can be represented by the equation Qd=380-20P, where Qd is the

quantity demanded and P is the price. The supply schedule can be represented by the equation Qs=-120+30P, where Qs is the quantity supplied. Calculate the equilibrium price and quantity in the market for pizza. Answer: Qd=380-20P Qs=-120+30P Qd=Qs 380-20P = -120+30P 380+120 = 20P+30P 500 = 50P 500/5=P 10=P Qs=-120+30P =-120+30(10) =-120+300 = 180 unit