Microeconomics: Supply and Demand and Price
ECON 1001 – INTRODUCTION TO MICROECONOMICS
COURSE OUTLINE
1. Is economics a Science? Discuss
2. Sketch the following graphs:
(a) y = x
(b) Y= 3x + 1
(c) Y= 10 – 3X
(d) Y = 3
3. Identify the 2 curves in question 2 which are positively sloped. Explain.
(b) Identify which curve in question 2 is negatively sloped. Explain.
(c) Identify which curve in question 2 has zero slope. Explain.
4. What does ceteris paribus mean? Why is the concept useful to economists?
5. Why does the distinction between a positive and a normative state matter for economics? 6. What is a model? Why do economists use models.
7. Why is the shape of the economy’s production possibility curve concave?
8. The following data show the production possibilities for a hypothetical economy during one year:
Output of X Output of Y
1000 0
800 100
600 200
400 300
200 400
0 500
(a) Plot these points on a graph. Do they appear to lie along a straight line?
What is that line production possibility frontier?
(b) Explain why output levels X=400, Y=200 or X=300, Y=300 are inefficient.
Show these output levels on your graph.
(c) Explain why output levels of X=500, Y=350 are unattainable in this economy. (d) What is the opportunity cost of an additional unit of Y output in terms of X output in this economy. Does this opportunity cost depend on the amounts being produces?
9. Give two reasons for the gradual increase in the number of free market economies over the last two to three decades.
2
10. (a) Consider a demand curve of the form
QD = -2P + 20 where QD is the quantity demand of a good and P is the price of the good. Also consider a supply curve of the form QS = 2P - 4 where QS is the quantity supplied. Graph these curves. At what values of
P and Q do these curves intersect?
(b) Now suppose at each price individuals demand four more units of output,
i.e. the demand curve shifts to QD’ = - 2 P + 24, Graph this new curve. At what values of P and Q does the new demand
COURSE OUTLINE
1. Is economics a Science? Discuss
2. Sketch the following graphs:
(a) y = x
(b) Y= 3x + 1
(c) Y= 10 – 3X
(d) Y = 3
3. Identify the 2 curves in question 2 which are positively sloped. Explain.
(b) Identify which curve in question 2 is negatively sloped. Explain.
(c) Identify which curve in question 2 has zero slope. Explain.
4. What does ceteris paribus mean? Why is the concept useful to economists?
5. Why does the distinction between a positive and a normative state matter for economics? 6. What is a model? Why do economists use models.
7. Why is the shape of the economy’s production possibility curve concave?
8. The following data show the production possibilities for a hypothetical economy during one year:
Output of X Output of Y
1000 0
800 100
600 200
400 300
200 400
0 500
(a) Plot these points on a graph. Do they appear to lie along a straight line?
What is that line production possibility frontier?
(b) Explain why output levels X=400, Y=200 or X=300, Y=300 are inefficient.
Show these output levels on your graph.
(c) Explain why output levels of X=500, Y=350 are unattainable in this economy. (d) What is the opportunity cost of an additional unit of Y output in terms of X output in this economy. Does this opportunity cost depend on the amounts being produces?
9. Give two reasons for the gradual increase in the number of free market economies over the last two to three decades.
2
10. (a) Consider a demand curve of the form
QD = -2P + 20 where QD is the quantity demand of a good and P is the price of the good. Also consider a supply curve of the form QS = 2P - 4 where QS is the quantity supplied. Graph these curves. At what values of
P and Q do these curves intersect?
(b) Now suppose at each price individuals demand four more units of output,
i.e. the demand curve shifts to QD’ = - 2 P + 24, Graph this new curve. At what values of P and Q does the new demand