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

Quantity

D1

Q1

S1

S2

0

E2

E1

P2

P1

Q2

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

Quantity

D1

S2

S1

0

E1

E2

P1

P2

Q1 Q2

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.”

E1

P1

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

it’s 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.

Price of Cadillac

0

S

D

E

P

D1

Q1 Q

Quantity of Cadillac

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.

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.

S1

D1

E1

Quantity of notebooks

D2

Q1

P1

0

P2

Q2

E2

FIGURE 1

Price of notebook

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.

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.

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 one’s health.

Demand, D1

Price of eggs, P

Quantity of eggs, Q0

Supply, S1

Equilibrium, E1P1

Q1

P2

Q2

E2

S1

D1

D2

D2

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 one’s 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.

Demand, D1

Price of eggs, P

Quantity of eggs, Q0

Supply, S1

Equilibrium, E1P1

Q1

S1

D1

S2

S2

E2P2

Q2

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 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 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

Quantity

SS

E

E1

SS1

DD

0 Q1Q

P

P1

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.

PPrice

Quantity

SS

E

DD

0 Q1Q

P

P1

DD1

E1

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

Quantity

SS

E

DD

0 Q

P

DD1

Q1

P1 E1

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

Quantity

SS

E

DD

0 Q1Q

P

P1

DD1

E1

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 Quantity Demanded Quantity Supplied

RM 4 10,000 Tickets 8,000 Tickets

RM 8 8,000 8,000

RM 12 6,000 8,000

RM 16 4,000 8,000

RM 20 2,000 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

40

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 Quantity Demanded

RM 4 4,000 Tickets

RM 8 3,000

RM 12 2,000

RM 16 1,000

RM 20 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 Quantity Demanded Quantity Supplies

RM 4 14,000 8,000

RM 8 11,000 8,000

RM 12 8,000 8,000

RM 16 5,000 8,000

RM 20 2,000 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