Week 3 Assignment
BUSN 5260
Current Economic Analysis
Week 3: Personal Assignment
Some students have difficulty understanding the laws of supply and demand and the difference between changes in demand (supply), which are caused by changes in the respective determinates of demand or supply, and changes in quantity demanded (supplied) which result from changes in the price of the good or the service.
Before you complete this assignment, I suggest that you again review Chapter 3 and my lecture material provided this week. There are some basic principles which must be followed when constructing supply and demand graphs, for example, price is always on the vertical axis and output (quantity) on the horizontal axis.
I also strongly suggest that you review the website Economic Basics: Demand and Supply and the videos Supply & Demand Graphing Using Excel and the Macroeconomics for MBA YouTube Channel, from the Internet which can be found through these links.
If you have questions, remember to post them to the General Questions area of the Discussion forum.
Problems
Problem 1
For each of the following draw a separate diagram to demonstrate the answer. (Hint: Remember the difference in a change in demand [supply] and a change in quantity demanded [supplied]. Don't shift both curves unless appropriate). Describe what happens to equilibrium price and sales. Explain why or why not this makes sense in the real world.
-A-
Show the effect on the U.S. new construction residential housing market in the event of a severe economic recession.
SEE EXCEL DOCUMENT FOR DIAGRAM
In theory, during a recession both demand for, and the supply of homes would drop. Demand would drop due to unemployment and lack of expendable cash among consumers. Supply would drop as well due to construction companies going out of business, less availability of resources, and layoffs within the construction industry. This is show in the real world today by the lack of new housing starts and the drop
Current Economic Analysis
Week 3: Personal Assignment
Some students have difficulty understanding the laws of supply and demand and the difference between changes in demand (supply), which are caused by changes in the respective determinates of demand or supply, and changes in quantity demanded (supplied) which result from changes in the price of the good or the service.
Before you complete this assignment, I suggest that you again review Chapter 3 and my lecture material provided this week. There are some basic principles which must be followed when constructing supply and demand graphs, for example, price is always on the vertical axis and output (quantity) on the horizontal axis.
I also strongly suggest that you review the website Economic Basics: Demand and Supply and the videos Supply & Demand Graphing Using Excel and the Macroeconomics for MBA YouTube Channel, from the Internet which can be found through these links.
If you have questions, remember to post them to the General Questions area of the Discussion forum.
Problems
Problem 1
For each of the following draw a separate diagram to demonstrate the answer. (Hint: Remember the difference in a change in demand [supply] and a change in quantity demanded [supplied]. Don't shift both curves unless appropriate). Describe what happens to equilibrium price and sales. Explain why or why not this makes sense in the real world.
-A-
Show the effect on the U.S. new construction residential housing market in the event of a severe economic recession.
SEE EXCEL DOCUMENT FOR DIAGRAM
In theory, during a recession both demand for, and the supply of homes would drop. Demand would drop due to unemployment and lack of expendable cash among consumers. Supply would drop as well due to construction companies going out of business, less availability of resources, and layoffs within the construction industry. This is show in the real world today by the lack of new housing starts and the drop