ECO111 Microeconomics

Class: MKT1609
Name: Nguyen Van Ly
Email to: thuyvtt@fpt.edu.vn

Individual Assignment 01
Question 1. You can allocate your time for the next four years between studying and
working at a car wash. Each semester you spend studying you can earn 15 credit hours and
each semester you work at the car wash you wash 800 cars. If you have 8 semesters to
allocate, label each of the following on a graph
a. Your production possibilities curve (show below the graph)
b. A point that is unattainable (k đat được) - point A 90 credit hours and 4800 car washes (or
any point on ppc)

c. A point that is efficient - point B 60 credit hours and 3000 car washes

d. Plot and label a point on your graph that represents a decision to take a semester off from both
studying and working - point C 105 credit hours and 5600 car washes (or any point on ppc)

Question 2. Refer to the graph provided to answer the following questions

Price
Supply
 7

3
Demand

0
100 175 220 Quantity demanded

a. What are the equilibrium price and quantity in this market?

- the equilibrium price = $5
- the equilibrium quantity = 175

b. What is the effect of a price ceiling of $3 placed on this market?

- quantity of supply =100
- quantity of demand =220
=> shortage : 120 products

c. What is the effect of a price ceiling of $7 placed on this market?

- quantity of supply =220
- quantity of demand =100
=> surplus : 120 products
no effect

d. If price in this market is $7, explain the adjustment process that will bring the
market back to equilibrium.
- supply shift left
- demand down

Question 3. You operate your own business selling college t-shirts. The demand
schedule for your t-shirts is as follows: P = 25 - 0.5Q
P=10 => Q=30
P=15 =>Q=20
P=10 =>Q=30

P=a-bQ
P=s+bQ
Q= a-/+bQ
a. Graph the demand curve for your t-shirts.
 b. Calculate the price elasticity of demand when price equals $10.

E = changeQ/Q/changeP/P = P/Q x1/0,5=2 x 1/3

=>E=0,67

c. In what range does price elasticity of demand fall at $10 (elastic <co gian>,
unit elastic <dvi co gian>, inelastic <k co gian>)?
- inelastic

d. If your goal is to maximize total revenue, how should you change price if you are
currently charging $10?

-increasing P to the maximum

-decreasing Q

Question 4.
a.Use the information in the graph below to find price elasticity of supply at point A.

Price Supply

4 A
 0 20 30 Quantity Demanded
P = a+bQ
4= x+20y => x=-2
7= x+30y => y=0,3
=>P = -2+0,3Q
 E = 4/20 x 1/0,3 = 0,67

4b. Based on the elasticity of supply in part a, if price increases by 10%, by how much
will quantity supplied change?
- the price increases by 10% ,
- the supply increases by 6,7%
- the elasticity = 0,67

4c. What will happen to the price elasticity of supply, in each of the following cases
(becomes more inelastic, more elastic, or does not change)?
i>inputs become easier to transport
- increase S
- decrease D
Become more elastic
ii>new inputs into production of the good are found
-increase S
-decrease D
Become more elastic

iii>the firm moves from the short-run to the long-run

-increase S
-decrease D
Become more elasticity

Question 5. Which of the following is true for a vertical supply curve?

a. Price elasticity of supply is

perfect elastic
b. Quantity supplied is very
responsive to price changes
c. Price elasticity of supply is
inelastic
d. Price elasticity of supply is
infinite
e. Quantity supplied is
negatively related to price
a. Price elasticity of supply is
perfect elastic
b. Quantity supplied is very
responsive to price changes
c. Price elasticity of supply is
inelastic
d. Price elasticity of supply is
infinite
e. Quantity supplied is
negatively related to price
 CHOOSE D. Price
elasticity of supply is infinite.
a. Price elasticity of supply is
perfect elastic
b. Quantity supplied is very
responsive to price changes
c. Price elasticity of supply is
inelastic
d. Price elasticity of supply is
infinite
e. Quantity supplied is
negatively related to price
CHOOSE D. Price
elasticity of supply is infinite.
a. Price elasticity of supply is perfect elastic
b. Quantity supplied is very responsive to price changes
c. Price elasticity of supply is inelastic
d. Price elasticity of supply is infinite
e. Quantity supplied is negatively related to price

ANSWER : C