Supply and demand curve.

  1. The following table shows bottled water demand and supply for a particular city:
    PRICE DEMAND SUPPLY
    $1.10 8,000 -0-
    $1.15 7,000 1,000
    $1.20 6,000 2,000
    $1.25 5,000 3,000
    $1.30 4,000 4,000
    $1.35 3,000 5,000
    $1.40 2,000 6,000
    $1.45 1,000 7,000
    $1.50 -0- 8,000 a.) Draw supply and demand curve. Identify equilibrium price and quantity.
    b.) Identify Consumer Market Surplus and Producer Market Surplus.
    c.) Using your graph, calculate the dollar value of consumer surplus and dollar value of producer surplus.
  2. State whether each of the following will increase or decrease the attractiveness of going to college and give your reasoning: (10 points)
    a.) A decrease in estimated working life.
    b.) An increase in the expected earnings of high school students.
    c.) Permanently higher interest rates.
  3. Suppose the costs of producing winter hats and wheat in the US and Russia are:

Per Winter Hat US $10.00 Russia 5,000 Rubles
Per Bushel of Wheat US $1.00 Russia 2,500 Rubles

a. What is the opportunity cost of producing one more winter hat in the US? In Russia?

b. What is the opportunity cost of producing one more bushel of wheat in the US? In Russia?

c. Which country has a comparative advantage in winter hats? In wheat?

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