Question

HOMEWORK ASSIGNMENT # 1

Due Date: Tuesday, February 20, 2018 by 5:15 pm

Required format: This assignment is worth 20 pts. You should use Microsoft Word or a similar typing program to write your answers to the questions below. Hand-written copies will be subject to a deduction of 5 pts. Take a photo of your graphs and paste them as a picture in your document or draw them using one of the drawing tools available in Excel or Word. All the publications and internet sources you rely upon to prepare some of your answers should be listed at the end in the form of a proper bibliography (which should include complete information on magazine or journal titles, dates of publication, page numbers, and website addresses - if applicable).
Submission: You are expected to submit two copies of your homework – a hard copy in class on Tuesday, February 20 and an electronic copy via the drop box created on HuskyCT. Your work will be checked for plagiarism via SafeAssign. Submitting the same answers as a fellow student or simply copying information from a publication/internet source is considered plagiarism. According to Uconn policies such assignments receive 0 points. Late submission is allowed, but is subject to a 3-points deduction per day.

1. The following table indicates the monthly quantities of lamb meat supplied and demanded at different prices.
Price of Lamb Meat ($ per pound)
Quantity Demanded (in thousands)
Quantity Supplied (in thousands) $4 76 56 $5 70 60 $6 64 64 $7 58 68 $8 52 72 $9 46 76
(a) Use the above information to plot the demand and supply curves for lamb meat (make sure to properly label your graph). What is the equilibrium price and quantity? How do you know? (1 pt.) (b) Why is the demand curve downward sloping? Why is the supply curve upward sloping? Explain briefly. (1 pt.) (c) What would happen if the price of lamb meat increases to $9? What would happen if it falls to $4? Support both answers with appropriate graphs and arguments. Determine the market condition due to each change. Hint: Remember the discussion in class about gasoline shortage. (2 pts.) (d) In what direction would equilibrium price and quantity move (i.e. increase, decrease, or not change) if there is a decrease in the number of lamb meat consumers (say, due to change in dietary preferences)? Use a graph to illustrate the situation and explain your answer. (1.5 pts.) (e) In what direction would equilibrium price and quantity move (i.e. increase, decrease, or not change) if the cost of producing lamb meat decreases? Use a graph to illustrate the situation and explain your answer. Ignore the change in part d. (1.5 pts.)

ARE 1110, Spring 2018, Emma Bojinova

2. Typically, goods that are in high demand have a high market price. However, some goods that are in high demand during their peak season have lower prices as compared to their out-of-season price. Use your knowledge of supply & demand to explain the lower equilibrium price of cherries sold in the summer (their peak season), as compared to their price during the rest of the year (say, in the winter). Show it graphically and briefly explain. (3 pts.)
Hint: You should draw two demand and two supply curves in the same graph (for winter and summer). Start with the winter to show your initial demand and initial supply of cherries. Then, show the changes that occur in the summer months and prove that the price of cherries in the summer is lower than in the winter.

3. Consider the market for railroad transportation (number of railroad trips offered/produced and demanded). The two parties directly involved in a railroad transaction, the railway company and passengers, both benefit from having railroad transportation. Assume that railway engines create sparks that ignite surrounding woodlands and farmlands, thus, destroying timber and crops. (a) Use a demand-supply diagram to illustrate the market equilibrium in railroad transportation. Show the demand and supply curves. Label the market equilibrium quantity Qm and the market equilibrium price Pm. (1 pt.)
(b) Use the concept of externalities to argue that the free market will not produce the socially desirable quantity of railroad transportation (Qsd). Use your demand-supply diagram to compare the free market and the socially desirable quantities of railroad trips (i.e. which one is greater?). Is this a positive or a negative externality? Is it a production or a consumption externality? Hint: Do you have two different marginal cost curves or two different marginal benefit curves? (2 pts.)
(c) What kind of government policies could be used to improve upon the free market outcome in 3(a)? Discuss briefly two possible policies. (1.5 pts.)

4. (a) Define the terms Gross National Product (GNP) and Real Per Capita GNP. (1 pt.)
(b) State and explain three limitations of using real per capita gross domestic product as a measure of national well-being and progress when comparing different countries. (1.5 pts.)   
5. In 2017, the population of Sugarland was 200 million and its GNI (or GNP) was $80 billion. You are also told the following facts about this country: annual birth rate is 3.5%, annual death rate is 1.5%, annual net migration is 0.5 million, and GNI increases each year by $5 billion. (a) What will be the population of Sugarland in 2018? Note that net migration is given in millions, not in percentage. (1.5 pts.) (b) Calculate the per capita GNI of Sugarland in 2017 and in 2018. At what percentage rate will per capita GNI grow in this one year time period? (1.5 pts.)

Answer 1

Only one question at a time can be posted. Kindly post the others separately. I have answered the first, hope it helps!