Feb 23

QUESTION 1

1. For Question 1-8, consider a competitive market for a good where the demand curve is determined by the demand function: P=5-QD and the supply curve is determined by the supply function: P=QS.  Where P stands for Price, QD is quantity demanded and QS is quantity supplied.

What is the quantity demanded of the good when the price level is P = $1?

10 points   

QUESTION 2

1. What is the quantity supplied of the good when the price level is P = $1?

10 points   

QUESTION 3

1. At P=$1 there is:

 

		a. Competitive equilibrium in the market;
		b. Excess supply in the market;
		c. Excess demand in the market;
		d. Rationing in the market;

10 points   

QUESTION 4

1. What is the equilibrium quantity level for the good in the competitive market?

10 points   

QUESTION 5

1. What is the equilibrium price level for the good in the competitive market?

10 points   

QUESTION 6

1. What is the consumer surplus in the competitive market?

10 points   

QUESTION 7

1. What is the producer surplus in the competitive market?

10 points   

QUESTION 8

1. What is the total surplus in the competitive market?

10 points   

QUESTION 9

1. For Question 9-13, assume a market intervention of the form of price floor. The price floor is set at P=$3.5. This price floor is binding, so it has an impact on the equilibrium of the economy.

How many units of the good the producers are willing to supply the market at the considered market intervention?

10 points   

QUESTION 10

1. How many units of the good the consumers are willing to demand the market at the considered market intervention?

10 points   

QUESTION 11

1. At price ceiling $3.5 there is:

		a. Competitive equilibrium in the market;
		b. Excess supply in the market;
		c. Excess demand in the market;
		d. Rationing in the market;

10 points   

QUESTION 12

1. What is the value of the Consumer Surplus considering this market intervention?

10 points   

QUESTION 13

1. What is the value of the Producer Surplus considering this market intervention?