Davenport University: Basic Economic Concepts Assignment Solution

This document presents a solved economics assignment covering foundational concepts. The assignment includes solutions to problems related to supply and demand analysis, equilibrium price determination, and the calculation of surpluses and shortages. The solutions demonstrate the application of economic principles to various scenarios, including determining quantities demanded and supplied at different price points, calculating equilibrium quantities and prices, and analyzing the effects of price changes on market outcomes. The assignment also involves applying equations to determine prices and quantities, and creating tables to illustrate market conditions under different scenarios.

Running Head: BASIC FOUNDATIONAL ECONOMIC CONCEPT
Basic Foundational Economic Concept
Mohammed Rahman
Davenport University

1BASIC FOUNDATIONAL ECONOMIC CONCEPT
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................2
Answer 3..........................................................................................................................................3
Answer 4..........................................................................................................................................4

2BASIC FOUNDATIONAL ECONOMIC CONCEPT
Answer 1
a) At the price of $40 quantity supplied equal to 10
b) At the price of $100 quantity demanded equal to 10
c) At the price of $80 quantity supplied and quantity demanded are equal. At this price supply
and demand both equals 20.
d) At a price of $100, quantity demanded is less than quantity supplied. At this price, quantity
supplied equals 25 and quantity demanded equals 10. Therefore, size of the surplus (25 – 10) =
15
e) At a price of $20, quantity supplied is 5 and quantity demanded is 50. The size of shortage
therefore is (50 – 5) = 45
0 10 20 30 40 50 60 70
$0
$20
$40
$60
$80
$100
$120
Quantity Demanded
Quantity Supplied
Quantity
Price
Answer 2
a) At a price of $90, quantity demanded is equal to 2000
b) At a price of $140, quantity demanded is equal to zero.

3BASIC FOUNDATIONAL ECONOMIC CONCEPT
c) At a price of $140, quantity supplied is equal to 1400
d) The equilibrium quantity obtained from equalization of demand and supply the equilibrium
quantity is obtained as 1200.
e) Corresponding to the equilibrium quantity the equilibrium price is $110.
Answer 3
Q = 2,000 – 100P
a) The number of cars sold at $12 each is obtained as follows
Q=2000−100 P
¿ 2000−(100 ×12)
¿ 2000−1200
¿ 800
b)
Q=2000−100 P
¿ , 100 P=2000−Q
¿ , P= 2000−Q
100
¿ , P=20−0.01 Q
In order to sell 1,000 caps, the company needs to set prices as
P=20−0.01 Q

4BASIC FOUNDATIONAL ECONOMIC CONCEPT
¿ 20− ( 0.01× 1000 )
¿ 20−10
¿ 10
c) When cap sells equals zero, then price is
P=20−0.01 Q
¿ 20− ( 0.01× 0 )
¿ 20
Answer 4
a)
Price QS QD
Surplus or
Shortage
$6.00 55000 5000 Surplus
$5.00 40000 15000 Surplus
$4.00 25000 25000 Neither
$3.00 10000 35000 Shortage
$2.00 -5000 45000 Shortage
$1.00 -20000 55000 Shortage
b)
Price QS QD QS - QD
Surplus or
Shortage
$6.00 55000 5000 50000 Surplus
$5.00 40000 15000 25000 Surplus
$4.00 25000 25000 0 Neither
$3.00 10000 35000 -25000 Shortage
$2.00 -5000 45000 -50000 Shortage
$1.00 -20000 55000 -75000 Shortage

5BASIC FOUNDATIONAL ECONOMIC CONCEPT
c) The equilibrium price is $4.