There are 5 questions . This assignment is out of 20 marks and is worth 10% of your final mark.
Learning Outcomes The learner will be able to: – analyze a market in terms of demand and supply and establish equilibrium accurately graph and label the demand and supply curves for a market
determine what will shift demand and supply
calculate and identify the impact of elasticity of demand in a market
create and interpret a production possibility curve Instructions Answer the following questions. submit your answers in ONE Word document
with all your answers labelled and in the correct order. Excel and PDF files will not be
accepted. 1. We are examining the market for gold picture frames in Ontario. Given below are the
demand schedule and supply schedule for this product for one year. Accurately
graph the demand and supply curves on one graph and determine equilibrium in this market. Label the graph and axises properly. State where equilibrium is (both price and Quantity}, don’t just point to it on the graph. Make sure you have the price and
quantity demanded on the correct axis. [5 marks — 4 marks for graph and 1 mark for equilibrium] Price Quantity Price Quantity
Demanded Su lied $45 1,800,000 $45 645 000 $50 1,575,000 $5.3 740 000 ’85 1 330 000 $85 865,000 $100 990.000
$125 1.195.000
$100 1,085,000 160 1 500 000 $185 900,000 $185 1 725 000 $210 745,000 $210 2,000,000 2. Fill in the following table stating how the event would affect demand or supply for gold
picture frames in Ontario. That is, will the curve shift to the left, to the right, will there be
movement along the curve (to the lett or to the right} or will there be no impact in the curve.
[3 marks — V2 mark each} Event Impact on Demand [will the
demand curve shift to the
left, the right, or remain the
same] Picture frames become less popular as wedding
gifts. able pictures. The price of picture frames increases. A contagious virus spread rapidly in your target
market forcing people to stay at home in their
pyjamas where they will not be taking many frame Impact on Supply [will the supply curve shift to the left,
the right, or remain the same] 4 The cost of the material to make picture frames
decreases.
5 Demand for picture frames increases.
6 A new technology makes it faster to assemble the
frames.
3. Illustrate Scenario #4 above by drawing the impact on the market in a correctly labeled graph. You do not need to invent numbers. Just make sure I know what
happens in the market and that the graph is properly labeled. Clearly identify the old
equilibrium and the new equilibrium. To do this you will need to draw the original demand and supply and then draw new demand and supply curves where
appropriate. [3 marks — ‘1 mark for correct graph, 1 mark for correct change, 1
mark for identifying new E.) no . The chart below represents the production possibilities for a company that produces
ereaders and tablets. [5 marks] . Create a properly labeled graph representing the company’s combination of choices
for these two products. [2 marks] . Using the letter ‘U’ indicate on the graph unattainable combinations. (1 mark)
Using the letter ‘A’, indicate on the graph the attainable but inefficient. (1 mark) . Using the letter ‘F’ indicate the combinations that are both attainable and efficient.
[1 mark] Production Possibility
Curve Tablets Ereaders 0 2,000,000
90,000 1,350,000
105000 1,050,000
1?0000 000,000
300,000 0 5.
a. Using the data found in Question 1, calculate the elasticity of demand and elasticity
of supply at each price change in the market for gold picture frames using the midpoint
formula for both supply and demand. Because you are calculating the change between
two levels, you will have 7 calculations for the 8 prices. (2 marks – 1 mark each for
correct demand and correct supply elasticities)
Price
Quantity
Elasticity of
Quantity
Elasticity of
Demanded
Demand
Supplied
Supply
$45
1,800,000
645,000
$60
1,575,000
740,000
$85
1,330,000
865,000
$100
1,300,000
910,000
$125
1, 195,000
1, 195,000
$160
1,085,000
1,750,000
$185
900,000
1,925,000
$210
745,000
2,100,000
b. Based on your elasticity of demand calculation, if the price of gold picture frames
rises from $100 to $125 will total revenue go up or down? Explain. You need to
answer the first part of this question by explaining how you interpreted the elasticity
of demand at this point. How much will revenue change (in dollar terms)? (2 marks
– 1 mark for calculation, one mark for explanation using elasticity)
