Questions

Answer all questions. The FIVE questions are equally weighted. Show your work for full credits.

1. - Consider the supply of computers. For each of the

··· following, state the effect on supply:

a. A change in technology that increase production costs

b. A decrease in the price of semiconductors

c. A decrease in the price of computers

d. An increase in the wages of computer assembly workers

e. A decrease in consumer incomes

2. Consider the demand for computers. In each of the following, state the effect on demand

a. decrease in consumer income.

b. An Increase in the price of computers

c. An increase in the price of internet service providers

3. A market demand and supply curves are given as:

Qd= 500-2P

Qs=-100+ 3p

a. What is the equilibrium price.

b. What is the equilibrium quantity.

c. If the current price is $100, what is the quantity demanded and supplied?

d. How much is the surplus or shortage?

4. What is the difference between ARC elasticity and point elasticity?

Qd=500-2Px

a. What is the total revenue function?

b. What is the marginal revenue function?

c. At what price is revenue maximized.

d. What is the maximum revenue at the above price?