ECN490 Microeconomics Critical thinking Assignment

must follow academic writing standards and APA style guidelines.

• Support your submission with course material concepts, principles, and theories from the textbook, along with at least two scholarly, peer-reviewed journal articles.
• Write at least 4-5 pages in length, excluding the title page, abstract and required reference page, which is never a part of the minimum content requirements.

ECN490 Microeconomics Critical thinking Assignment

Name of the book reference

Economics

Principles, Applications, and Tools

NINTH EDITION

Arthur O’Sullivan Steven M. Sheffrin Stephen J. Perez

Q1. According to the USA Today newspaper in March 2010:

“A frigid Florida winter is taking its toll on your sandwich. The sunshine state is the main U.S. source for fresh winter tomatoes, and its growers lost some 70 percent of their crop during January’s prolonged cold weather. The average wholesale price for a 25-pound box of tomatoes is now $30, up from $6.50 a year ago. Florida’s growers would normally ship about 25 million pounds of tomatoes a week; right now, they are shipping less than a quarter (8million). High demand has driven up prices and wholesalers are buying from Mexico. Based on that, some restaurants provided tomatoes only on request.”

1. Using the information above find the demand and supply curves in the market for winter tomatoes. (5 Marks)
2. Calculate the price elasticity of demand for winter tomatoes as well as elasticity of supply using the midpoint method. (5 Marks)

Q2. Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the product is given as QD=40-2P, while the supply function of the product is given as QS=2P where P is the price, QD is quantity demanded, and QS is quantity supplied. Solve the following demand function is given as: QD=40-2P. Calculate the equilibrium price and quantity. (5Marks)

Q3. Consider the demand for apples. If the prices of a substitute good(bananas) increases and the price of a complement good (apple pie) increases, can you tell for sure what will happen to the demand for apples? Why or why not? Illustrate your answer with a graph.

Q4. The market for pizza has the following demand and supply schedule (5 Marks)

ECN490 Microeconomics Critical thinking Assignment

1. Graph the demand and supply curves
2. What is the equilibrium price and quantity in this market?
3. If the actual price in this market is above the equilibrium price what would drive the market towards the equilibrium?
4. If the actual price in this market is below   the equilibrium price what would drive the market towards the equilibrium?

ECN490 Microeconomics Critical thinking Assignment

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