Full name: Ton Nu My Duyen

Class: E-BBA 11.1

Student code: 11191366

GROUP ASSIGNMENT PRESENTATION 2

Exercise 1: Demand and supply of fridge are shown in the table
below:

Price ($/unit) 100 120 140 160 180 200

Quantity Demanded (units) 1000 900 800 700 600 500

Quantity supplied (units) 300 400 500 600 700 800

Demand and supply Graph

250
D S
200 E
Price ($/unit)

150

S D
100

50

0
200 300 400 500 600 700 800 900 1000 1100

Quantity Demanded and Suppied (units)

Demand Supply
 1. What are the demand and supply equations, equilibrium price
and equilibrium quantity for fridge ?

 The demand equation for fridge: P = a – b × Qd

∆P
+, We have ∆ Qd = constant, ∆ P =20, ∆ Qd =100
∆P 20 1
b= ∆ Qd = 100 = 5

+, Substitute the values of b and P, Q of any point in the equation:

1
100 = a− ×
5 1000 => a = 300

−1
So, the demand equation for fridge is: P = 300 5
× Qd
 The supply equation for fridge: P = c + d × Qs
∆P
+, We have ∆ Qs = constant, ∆ P= 20, ∆ Qs= 100

∆P 20 1
b = ∆ Qs = 100 = 5

+, Substitute the values of b and P, Q of any point in the equation:

1
100 = a+ 5 × 300 => a = 40

+1
So, the supply equation for fridge is: P = 40 5
× Qs

 Equilibrium price for fridge

We have, Qd = 1500 - 5P; Qs = 5P – 200

QE = Qd = Qs => 1500 - 5P = 5P – 200
 => P = 170
 Equilibrium quantity for fridge
QE = Qd => QE = 1500 - 5×170 => QE = 650

2. What are the surplus and shortage of fridge at the price of $ 200
and $ 110 ?

+) At the price of $200 , Qd = 500 units, Qs = 800 units

 Qd < Qs

The surplus of fridge at the price of $ 200 is

∆ Q=¿ Qs – Qd = 800 – 500 = 300 (units)

+) At the price of $110

Qd = 1500 -5P = 1500 – 5×110 = 950

Qs = 5P – 200 = 5×110 – 200 = 350

 Qd > Qs
The shortage of fridge at the price of $ 110 is

∆ Q=¿ Qd – Qs = 950 - 350 = 600 (units)

 3. Suppose the supply of fridge is constant, what happened for
demand for fridge if price of electricity increase? Given that
quantity demanded for fridge change 300 units at each price level,
what are new equilibrium price and new equilibrium quantity for
fridge?

 If the supply of fridge is constant, the demand for fridge will decrease
if price of electricity increase.
 Because when electricity prices rise, the price of the product will
increase. According to the law of demand, the quantity demanded
will decrease. So, demanded curve will shift to the left side .
 Non-price factor in this situation is Government policies
 The quantity demanded for fridge decrease 300 units at each price
level:
 Demand and supply Graph
250
D’ D S
200
E’
Price ($/unit)

150

100
S D
50

0
200 300 400 500 600 700 800 900 1000 1100

Quantity Demanded and Suppied (units)

Demand Supply

∆P
+, We have ∆ Qd ' = constant, ∆ P =20, ∆ Qd ' =100

∆P 20 1
b= ∆ Qd ' = 100 = 5

+, Substitute the values of b and P, Q of any point in the equation:

1
100 = a− ×
5 700

 a = 240
−1
So, the new demand function for fridge is: P = 240 5
× Qd’
or Qd’ = 1200 – 5P
The market balances again when the quantity demanded (new) equals
the quantity demanded, or:

Qd’ = Qs

 1200 – 5P = 5P – 200
 P = PE’ = 140
 PE’ = 140 => QE’ = 500

So, the new equilibrium is P = 140, Q = 500

4. Suppose government imposes a tax of $ 10 per one units of fridge

sold, what are new equilibrium price and new equilibrium quantity
for fridge?

Government imposes a tax of $ 10 per one units of fridge sold, the

price will increase $10 per one units
1
The new supply function is P = 50 + 5 QS’’ or QS’’ = 5P – 250

The market balances again when the quantity supply (new) equals the
quantity demanded, or:
QS’’ = Qd
 5P – 250 = 1500 -5P
 P = PE’’ = 175
PE’’ = 175 => QE’’ = 625

The equilibrium price is $175 and equilibrium quantity is 625

units
5. Suppose government supports for the sellers the amount of $ 10
per one units of fridge sold, what are new equilibrium price and
new equilibrium quantity for fridge?

Government supports for the sellers the amount of $ 10 per one units
of fridge sold, the price will decrease $ 10 per one units
1
The new supply function is P = 30 + 5 QS’’ or QS’’ = 5P – 150

The market balances again when the quantity supply (new) equals the
quantity demanded, or:
QS’’ = Qd
 5P – 150 = 1500 - 5P
 P = PE’’ = 165
PE’’ = 165 => QE’’ = 675

The equilibrium price is $165 and equilibrium quantity is 675

units

Exercise 2: With the aid of diagrams, show how each of the

following events affects the supply and/or demand curve for
motor cycles. In each case, show and state the effect on the
equilibrium price and quantity.

1. An increase in Vietnamese personal income tax rates

The demand curve will shift to the left of the former (Because tax is
decided by the government – one of the non-price factors. If the
Vietnamese personal income tax rates increases , the demand will
decreases)
2. An increase in the price of steel

The supply curve will shift to the left of the former (Because when the
price of the input increases ,the supply will decreases)
 3. An improvement in technology in motor vehicle production at the
same time as a recession hits the Vietnamese economy

+) The improvement in technology makes motor vehicle supply

quantity rise

+) However, there happens an economic recession. Therefore, the

price of motor vehicle need to be decrease in order to balance with the
market, Because of that, consumer demand will drop

+) In this case, the supply curve will be shifted to the right and the
demand curve will be shifted to the left

+) As we can see, both the new quilibrium price and equilibrium

quantity move down to the lower left of the formal one

S’ D
S D’
E
PE
PE’
D E’

D’ S’

QE’
Depend on