EC208 Intro to Microeconomics – Quiz 2
Professor Matt Festa
Due in class: Wednesday Feb 21th.
1) Draw the supply and demand for nursing care. Over the past few years the average age of the population increased from 40 to 45 years (meaning there are now more older people in the population. Show any shifts in the supply and/or demand curve for nursing care. What will be the effect on price and quantiy of this change in the population composition? (2 points).
2) Draw the supply and demand curve for Ford. Ford develops a new technology that allows for cars to be manufactured quicker and cheaper. In addition, the news reports have been praising the new Fusion car for its fuel efficiency and hot style. Show any shifts in supply and/or demand. What will be the effect on price and quantity of this new information? (3 points).
3) What is the definition of “Price elasticity of demand?” In your own words what does this measure? If I tell you that the price of oil increased 1% and quantity demanded decreased 0.25% what is the price elasticity of demand for oil? Is oil elastic or inelastic? (3 points).
4) Cross Price elasticity of demand – The price of high speed internet connection went up 2% and the quantity demanded of computers declined 4%. Based on your calcution is this a substitute, complementary or independent good (2 points).