Question

Using demand and supply analysis, illustrate how each of the following scenarios would affect the equilibrium price and quantity in the respective markets. The use of carefully labelled diagrams is required with an explanation. a. The introduction of a new technology reduces the cost of production for all firms in the computer market. b. A strong advertising campaign has caused the consumer to demand more Pepsi at every existing price. c. The passage of Dorian a category 5 hurricane destroys fifty percent of the carrot crop. Question 2 (a) Consider a demand curve in the form Qd = 20 – 2p where Qd is the quantity demanded of a good and P is the price of the good. Additionally consider a supply curve of the form Qs = 2p – 4 where Qs, is the quantity supplied. At what values of P and Q do these curves intersect. b) Now suppose at each price individual’s demand four more units of output, that is the demand curve shifts to Qdd = 24 – 2p. At what values of P and Q does the new demand curve intersect the supply curve identified in part (a) c) State and explain three factors that can cause the demand curve to shift from Qd to Qdd. 1. Define the terms Politics, Political Economy and political ideology? 2. Try to identify the ideology (Marxism, Socialism, Liberalism, Conservatism or Fascism) behind the system of public management in your own country and have a brief discussion among your peers.

Answer 1