Posted: February 22nd, 2016

Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $ 50 is imposed in this market. (

Remark 1: Explain clearly and use graphical demand/supply analysis to illustrate your
points.
Remark 2: When a question refers to the market (for a particular product) it means ‘the
equilibrium price and the equilibrium quantity’
The following information applies to the next 3 questions. Suppose demand and supply are
given by Qd =60 – P and Qs
= P – 20.
Question 7: What are the equilibrium quantity and price in this market? (4 points)
Question 8: Determine the quantity demanded, the quantity supplied, and the magnitude of
the surplus if a price floor of $ 50 is imposed in this market. (6 points)
Question 9: Determine the quantity demanded, the quantity supplied, and the magnitude of
the shortage if a price ceiling of $ 32 is imposed in this market. (6 points)
Question 10: You are the manager of a midsized company that assembles personal
computers. You purchase most components— such as random access memory (RAM) in a
competitive market. Based on your marketing research, consumers earning over $ 80,000
purchase 1.5 times more RAM than consumers with lower incomes. One morning, you pick
up a copy of The Wall Street Journal and read an article indicating that input components for
RAM are expected to rise in price, forcing manufacturers to produce RAM at a higher unit
cost. Based on this information, what can you expect to happen to the price you pay for
random access memory? (4 points)
Question 11: What if, in addition to this change in RAM input prices, the article indicated
that the economy will be in a recession for the next two years. What will happen to the
equilibrium price of RAM when both of these factors take place at the same time? (