ASSIGNMENT 1

MICROECONOMICS – GROUP 10
Member group 10
01 02 03
Nguyen Phuong Truc
Nguyen Viet Hieu Nguyen Thanh Loc
Linh
Leader

04 05
Le Ngoc Hai Nguyen Khanh Dat
 EXERCISE
01
Demand and supply of fridge are shown in the table below:
1. What are the demand and supply equations, equilibrium price and equilibrium
quantity for fridge ?

● The demand equation for fridge:

We have:

Substitute the values of b and P, Q of any point in

the equation:
Then:
So, the demand equation for fridge is:
or
● The supply equation for fridge:
We have:

Then:
So, the supply equation for the fridge is: or
1.What are the demand and supply equations, equilibrium price and equilibrium
quantity for fridge ?

● Equilibrium price and quantity for fridge:

First, we have to solve the equation:

So the equilibrium price for fridge is:

($/unit)
Then, substitute the values of P to the
equation of we have the equilibrium quantity
for fridge: (units)
1.What are the demand and supply equations, equilibrium price and equilibrium
quantity for fridge ?
● The Equilibrium price and quantity for fridge:
First, we have to solve the equation:

So the equilibrium price for fridge is: ($/unit)

Then, substitute the values of P to the
equation of we have the equilibrium quantity
for fridge: (units)
2. What are the surplus and shortage of fridge at the price of $ 200 and $ 110
? We know that we have 2 equations:
● At the price of $200,
● When comparing, because:

● The surplus of the fridge at the price of $200 is:

(units)
● At the price of $110,
● When comparing, because:

● The shortage of the fridge at the price of $110 is:

(units)
3. Suppose the supply of fridge is constant, what happened for demand for fridge if price of electricity
increase? Given that quantity demanded for fridge change 300 units at each price level, what are new
equilibrium price and new equilibrium quantity for fridge?
● If the supply of fridge is constant, the demand for
fridge will decrease
● if price of electricity increase.
+ Because when electricity prices rise, the price of
the product will increase. According to the law of
demand, the quantity demanded will decrease. So,
demanded curve will shift to the left side .
+ Non-price factor in this situation is Government
policies
+ The quantity demanded for fridge decrease 300
units at each price level:
● We have:

● Then:
or

The market balances again when the quantity demanded (new) equals the quantity demanded, or:
($/unit)
And then, we have new equilibrium quantity: (units)
 4. Suppose government imposes a tax of $ 10 per one units of fridge sold, what are new
equilibrium price and new equilibrium quantity for fridge?

● Because the government imposes a tax of $ 10 per one units

of fridge sold, the price of fridge will increase $10 per unit.
● Then, we have new supply equation: or
● The market balances again when the quantity supply (new)
equals the quantity demanded,
or:

● Conclusion: The equilibrium price is $175 per unit and

equilibrium quantity is 625 units

5. Suppose government supports for the sellers

the amount of $ 10 per one units of f ridge sold, what
are new equilibrium price and new equilibrium quantity
for fridge?
 Government supports for the sellers the amount of $ 10 per one units of fridge sold, the price will decrease $ 10 per one units.
 The new supply function is or
 The market balances again when the quantity supply (new) equals the quantity demanded, or:

Conclusion: The equilibrium price is $165 per unit and equilibrium quantity is 675 units.
EXERCISE
02

With the aid of diagrams, show how each of the

following events affects the supply and/or demand
curve for motor cycles. In each case, show and state
the effect on the equilibrium price and quantity.
 1. An increase in Vietnamese personal income tax rates

Tax is decided by the government – one of the non-price factors that affects the income of
consumers to be lower. Therefore, the demand of consumers will decrease
The demand curve will shift to the left of the former
 2. An increase in the price of steel

The increase in the price of steel leads to the increase in the price of the motor vehicles.
According to the Law of Demand, the supply will decrease.
The supply curve will shift to the left of the former.
 3. An improvement in technology in motor vehicle production at the same time as a
recession hits the Vietnamese economy
• The improvement in technology will
make the motor vehicle supply quantity
rise.
• However, there also happens an
economic recession hitting the
Vietnamese economy. Therefore, the
income of consumer will be lower.
Because of that, consumer will drop
• In this case, the supply curve will move
to the right and the demand curve will be
move to the left .
• As we can see, both the new quilibrium
price and equilibrium quantity move
down to the lower left of the formal one.
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