Introduction To Economics Assignment Report

Running head: INTRODUCTION TO ECONOMICS
Introduction to Economics
Name of the Student
Name of the University
Course ID

INTRODUCTION TO ECONOMICS1
Table of Contents
Section A.........................................................................................................................................2
Question 1....................................................................................................................................2
Question 2....................................................................................................................................4
Question 3....................................................................................................................................5
Question 4....................................................................................................................................6
Section B..........................................................................................................................................6
Question 1....................................................................................................................................6
Question 2....................................................................................................................................8
Section C........................................................................................................................................11
Question 2..................................................................................................................................11
Question 4..................................................................................................................................12
Question 5..................................................................................................................................14
References......................................................................................................................................17

INTRODUCTION TO ECONOMICS2
Section A
Question 1
Market demand for smart watches is given as
Qd=75,000−10 P
Market supply for smart watches is given as
Qs=40 P−22,000
a)
Equilibrium occurs where market demand and market supply matches
Qd=Qs
¿ , 75,000−10 P=40 P−22,000
¿ , 40 P+10 P=75,000+22,000
¿ , 50 P=96,000
¿ , P= 92,000
50
¿ , P=1940
Q=75,000−10 P
¿ 75,000− ( 10 × 1940 )
¿ 75,000−19400
¿ 55600

INTRODUCTION TO ECONOMICS3
Equilibrium price = $1940
Equilibrium quantity = 55600
b)
i)
The new market supply curve is
Qs=40 P−21,000
At price = $1940, the new market supply can be determined as
Qs=40 P−21,000
¿ ( 40 × 1940 )−21,000
¿ 77,600−21,000
¿ 56,600
Because of the decrease in production cost market supply of smart watches increase from 55600
to 56600. Consequently, supply curve of smart watches shifts to the right raising available
quantity of smart watches in equilibrium and lower equilibrium price of smart watches (Pindyck
& Rubinfeld, 2015).