Asgn 1
ASSIGNMENT 1
Econ 101: Micro Economics
Instructor: Dr Rabia Aslam
This assignment is due on Friday Dec 12th, 2014. Please submit the assignment in time. Late assignments shall not be graded.
Answer all questions. Each answer carries 5 points
1. During the 1990s, technological advance reduced the cost of computer chips. How do you think this affected the market for computers? For computer software? For typewriters? Please draw a separate diagram to show the effects of this phenomenon on each market. ****************
2. Suppose that in the year 2005 the number of births is temporarily high. How does this baby boom affect the price of baby-sitting services in 2010 and 2020? (Hint: 5-year-olds need baby-sitters, whereas 15-year-olds can be baby-sitters.) ******************
3. The case study presented in chapter 4 discussed cigarette taxes as a way to reduce smoking. Now think about the markets for other tobacco products such as cigars and chewing tobacco. a. Are these goods substitutes or complements for cigarettes?
b. Using a supply-and-demand diagram, show what happens in the markets for cigars and chewing tobacco if the tax on cigarettes is increased.
c. If policymakers wanted to reduce total tobacco consumption, what policies could they combine with the cigarette tax? *******************
4. Because bagels and cream cheese are often eaten together, they are complements.
a. We observe that both the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. What could be responsible for this pattern—a fall in the price of flour or a fall in the price of milk? Illustrate and explain your answer.
b. Suppose instead that the equilibrium price of cream cheese has risen but the equilibrium quantity of bagels has fallen. What could be responsible for this pattern—a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer. ********************
5. Suppose that your demand
Econ 101: Micro Economics
Instructor: Dr Rabia Aslam
This assignment is due on Friday Dec 12th, 2014. Please submit the assignment in time. Late assignments shall not be graded.
Answer all questions. Each answer carries 5 points
1. During the 1990s, technological advance reduced the cost of computer chips. How do you think this affected the market for computers? For computer software? For typewriters? Please draw a separate diagram to show the effects of this phenomenon on each market. ****************
2. Suppose that in the year 2005 the number of births is temporarily high. How does this baby boom affect the price of baby-sitting services in 2010 and 2020? (Hint: 5-year-olds need baby-sitters, whereas 15-year-olds can be baby-sitters.) ******************
3. The case study presented in chapter 4 discussed cigarette taxes as a way to reduce smoking. Now think about the markets for other tobacco products such as cigars and chewing tobacco. a. Are these goods substitutes or complements for cigarettes?
b. Using a supply-and-demand diagram, show what happens in the markets for cigars and chewing tobacco if the tax on cigarettes is increased.
c. If policymakers wanted to reduce total tobacco consumption, what policies could they combine with the cigarette tax? *******************
4. Because bagels and cream cheese are often eaten together, they are complements.
a. We observe that both the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. What could be responsible for this pattern—a fall in the price of flour or a fall in the price of milk? Illustrate and explain your answer.
b. Suppose instead that the equilibrium price of cream cheese has risen but the equilibrium quantity of bagels has fallen. What could be responsible for this pattern—a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer. ********************
5. Suppose that your demand