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Worksheet 3 4

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This document contains a homework assignment on the topics of supply and demand. It includes instructions to draw individual and combined demand curves for Craig and Charlie's consumption of Tennent's lager based on price data provided. It also asks students to identify factors that would affect Craig's individual demand curve and to illustrate the impacts of changes to these factors using diagrams. The assignment concludes with a class problem involving discussing the effects of increases in hops costs on the lager market and decreases in satellite dish prices on the cable TV market using supply and demand diagrams.

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Week Commencing 17th October 2005 Semester 1: Week 4 31 101 ECONOMICS I Tutorial Worksheet No.2 Topic: Supply & Demand Name: Registration No: Tutor: Tutorial Group: Homework Charlie and Sharleen have a new flatmate called Craig. Craig and Charlie are friends who like to drink lager together. 1. (a) Using the data in Table 1 draw Craig’s and Charlie’s individual demand curves for Tennent’s lager on the same diagram. Weekly Demand for Cans of Tennent’s Lager Price ( £) Craig Charlie 1.00 21 11 1.50 17 8 1.75 12 3 Hint: The area below indicates the size your diagram should be. (b) Draw a demand curve which represents the combined demand for Tennent’s lager by Craig and Charlie. Add this to the diagram you have drawn for Part A. Supply & Demand Page 1
Week Commencing 17th October 2005 Semester 1: Week 4 2. (a) List three factors (apart from price) which are likely to affect Craig's demand for Tennent’s lager. 1. 2. 3. (b) Using new diagrams (one for each factor listed in response to Part A) show the effect upon the likely position of Craig's demand curve of a change in each of these three factors. Diagram 1: Supply & Demand Page 2
Week Commencing 17th October 2005 Semester 1: Week 4 Diagram 2: Diagram 3: Supply & Demand Page 3
Week Commencing 17th October 2005 Semester 1: Week 4 Class Problem: Discuss the effects of: (a) an increase in the cost of hops upon the market for Tennent’s lager; (b) a fall in the price of satellite dishes upon the market for cable TV. Hint: Your answers should make use of appropriate market supply and demand diagrams and you should follow through each step in the argument. For example, how will an increase in the cost of hops (an input to lager production) alter the position of the demand and/or supply curves for lager Is there an excess demand or supply for lager at the original market price? How does the market price for beer respond? How does this eliminate any excess supply or demand? How do the new equilibrium market price and quantity traded compare with the original equilibrium values? Diagram and discussion in response to Part (a): Diagram and discussion in response to Part (b): Supply & Demand Page 4

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Worksheet 3 4

  • 1. Week Commencing 17th October 2005 Semester 1: Week 4 31 101 ECONOMICS I Tutorial Worksheet No.2 Topic: Supply & Demand Name: Registration No: Tutor: Tutorial Group: Homework Charlie and Sharleen have a new flatmate called Craig. Craig and Charlie are friends who like to drink lager together. 1. (a) Using the data in Table 1 draw Craig’s and Charlie’s individual demand curves for Tennent’s lager on the same diagram. Weekly Demand for Cans of Tennent’s Lager Price ( £) Craig Charlie 1.00 21 11 1.50 17 8 1.75 12 3 Hint: The area below indicates the size your diagram should be. (b) Draw a demand curve which represents the combined demand for Tennent’s lager by Craig and Charlie. Add this to the diagram you have drawn for Part A. Supply & Demand Page 1
  • 2. Week Commencing 17th October 2005 Semester 1: Week 4 2. (a) List three factors (apart from price) which are likely to affect Craig's demand for Tennent’s lager. 1. 2. 3. (b) Using new diagrams (one for each factor listed in response to Part A) show the effect upon the likely position of Craig's demand curve of a change in each of these three factors. Diagram 1: Supply & Demand Page 2
  • 3. Week Commencing 17th October 2005 Semester 1: Week 4 Diagram 2: Diagram 3: Supply & Demand Page 3
  • 4. Week Commencing 17th October 2005 Semester 1: Week 4 Class Problem: Discuss the effects of: (a) an increase in the cost of hops upon the market for Tennent’s lager; (b) a fall in the price of satellite dishes upon the market for cable TV. Hint: Your answers should make use of appropriate market supply and demand diagrams and you should follow through each step in the argument. For example, how will an increase in the cost of hops (an input to lager production) alter the position of the demand and/or supply curves for lager Is there an excess demand or supply for lager at the original market price? How does the market price for beer respond? How does this eliminate any excess supply or demand? How do the new equilibrium market price and quantity traded compare with the original equilibrium values? Diagram and discussion in response to Part (a): Diagram and discussion in response to Part (b): Supply & Demand Page 4