AB224 Unit 3 Assignment – Supply and Demand

Subject: Economics / Microeconomics
Question
Unit 3 AB224 | Microeconomics Unit 3 Assignment: Supply and
Demand
Name:
Course Number and Section: AB224–0X
Date:
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Assignment
In this Assignment, you will demonstrate your understanding of the Production
Possibility model, marginal opportunity costs, and the differences in marginal
opportunity costs. Additionally, you will demonstrate a clear understanding of the crucial
concept of supply and demand, and the impact on the original group caused by a
change in demand.
In this Assignment, you will be assessed on the following outcome:
AB224-1: Examine how various supply and demand scenarios affect the way prices
and quantities are set by market interactions in perfectly competitive markets. Page 1 of 7 Unit 3 AB224 | Microeconomics Questions
1. In ancient days a tribe of natives on the mythical continent of Atlantis was able to
produce two commodities to eat. They could harvest fish from the sea and they could
grow a form of wild oats. Table 1.a. and Graph 1.a. both show the maximum annual
output combinations of fish and wild oats that could be produced by the natives of
Atlantis. Table 1.a.
Maximu
Bushels
m annual Kilograms
of wild
output
of fish
oats
options
1
2
3
4
5
6
7
8 7,000
6,000
5,000
4,000
3,000
2,000
1,000
0 0
300
500
625
710
775
825
850 a. Could the Atlantis tribe have produced 800 bushels of wild oats and 5,000
kilograms of fish at the same time? Explain your answer. Where would this point
lie relative to the production possibility frontier? b. Using Table 1.a., what would have been the marginal opportunity cost of
increasing the annual output of wild oats by 200 bushels, from 300 bushels up to
500 bushels? c. Using Table 1.a., what would have been the marginal opportunity cost of
increasing the annual output of wild oats by 200 bushels, from 625 bushels up to
825 bushels? Page 2 of 7 Unit 3 AB224 | Microeconomics d. Why are the marginal opportunity costs for two similar batches of 200 bushels of
wild oats not the same? Explain. What does this difference imply about the shape
of the Atlantis tribe’s production possibility frontier curve? 2. Suppose that the supply schedule of Brazilian Coffee beans is as follows:
Price of Brazilian Coffee
beans
(per pound)
$4.00
$3.50
$3.00
$2.50
$2.00 Quantity of Brazilian Coffee
beans supplied
(pounds)
6,000
5,000
4,000
3,000
2,000 Suppose that Brazilian Coffee beans can be sold only in Brazil. The domestic Brazilian
demand schedule for Brazilian Coffee beans is as follows:
Price of Brazilian Coffee
beans
(per pound)
$4.00
$3.50
$3.00
$2.50
$2.00 Brazilian Quantity of Brazilian
Coffee beans demanded
(pounds)
1,000
2,500
4,000
5,000
7,000 a Below is the graph of the domestic Supply and Demand (Graph 2.a.) for Brazilian
Coffee beans. From the supply and demand schedules above, what are the
equilibrium price and quantity of Brazilian Coffee beans? Page 3 of 7 Unit 3 AB224 | Microeconomics Now suppose that Brazilian Coffee beans can also be sold in Canada. The Canadian
demand schedule for Brazilian Coffee beans is as follows:
Price of Brazilian Coffee
beans
(per pound)
$4.00
$3.50
$3.00
$2.50
$2.00 Canadian Quantity of Brazilian
Coffee beans demanded
(pounds)
1,000
2,500
3,000
5,000
5,500 b Complete the following table by inserting the total Brazilian Coffee beans demanded
by both the Brazilians and Canadians at each price (the combined (total) demand
schedule for Brazilian Coffee beans).
Price of Brazilian
Coffee beans Canadian
Quantity of
Brazilian Coffee
beans demanded Brazilian
Quantity of
Brazilian Coffee
beans demanded Total Brazilian
Coffee
Demanded
Page 4 of 7 Unit 3 AB224 | Microeconomics (per pound) (pounds) (pounds) $4.00 1,000 1,000 $3.50 2,500 2,500 $3.00 3,000 4,000 $2.50 5,000 5,000 $2.00 5,500 7,000 (pounds) Below is the new Supply and Demand graph (Graph 2.b.) that illustrates the equilibrium
price and quantity of Brazilian Coffee beans. c From the supply schedule and the combined Canadian and Brazilian demand
schedule, what will be the new price at which Brazilian coffee growers can sell Brazilian
Coffee beans?
d With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what
price will be paid by Brazilian consumers? Page 5 of 7 Unit 3 AB224 | Microeconomics e With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what
will be the quantity consumed by Brazilian consumers? ——————————————-References: Unit 3 Assignment: Supply and Demand Grading Rubric
Content
Full Assignment
Overall Writing:
Correct coversheet information at the top
of 1st page
APA format for answers
Correct citations
Standard English no errors
At least one, or more, references
Answers: provides complete information
demonstrating analysis and critical
thinking:
Individual Questions:
1. a. – Can this quantity be produced, where
does point lie?
1. b. – What is the opportunity cost from
200 to 300? Percent
Possible
100% Points
Possible
80 20% 16
5%
3%
3%
4%
5% 80% 4.00
2.40
2.40
3.20
4.00 64
8% 6.40 8% 6.40 Page 6 of 7 Unit 3 AB224 | Microeconomics 1. c. – What is the opportunity cost from
625 to 825?
1. d. – Why are b. and c. not the same?
What is the shape of the curve?
2. a. – What is equilibrium quantity and
price?
2. b. – What is the new demand schedule?
2. c. – What is the new price?
2. d. – What price will Brazilians pay?
2. e. – What quantity will Brazilians buy?
Sub-total for individual Questions: 8% 6.40 12% 9.60 3%
7%
10%
12%
12%
80% 2.40
5.60
8.00
9.60
9.60
64.00

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