Seneca College Economics Demand and Supply Questions

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Assignment #2 – Version 2
Question 1 – Below are some hypothetical statistics for a country in September 2020. Compute the unemployment
rate for that month. (8 Marks)
Population
987, 650
Working age population
726, 990
Participation Rate
Employed
68.2%
459,307
Question
What is the size of the labour force in
this economy?
Your Answers & Calculations
Marks
Possible
(10)
2
What is the unemployment rate in
this economy?
1
What is the employment rate in this
economy?
1
Suppose that 2,800 of the
unemployed people stop searching
for work. What is the unemployment
rate now?
2
Suppose that 9,500 people migrate to
Canada and start to look for work as
soon as they land in the country.
What happens to the unemployment
rate in that case?
(Assume there are no discouraged
workers from the above question)
2
Question 2: The table below presents data on the number of hotels and prices in a market. Answer the
following question in the space provided. (10 Marks)
A. Draw the diagram to represent this market below. Carefully label the diagram fully. (2 marks)
B. What are the equilibrium values of price and quantity? (1 mark) Answer: _____________________
C. If one of the hotels has been purchased and converted to a storage unit, what are the new equilibrium values of price
and quantity? (2 mark) Answer: ____________________
D. Modify the diagram you made in part A. to reflect the change in part C. Please use a different colour of ink to show the
change you are drawing. CAREFULLY LABEL THE CURVES TO REFLECT THE CHANGES YOU HAVE MADE.
(2 marks)
E. Now suppose that supply and demand are the same as in part A (the original supply and demand schedules). If demand
decreases by four units, what are the new equilibrium values of price and quantity? (1 mark)
Answer:
____________________
F. Modify the diagram you made in part A. to reflect the change in part E. Please use a different colour of ink to show the
change you are drawing. CAREFULLY LABEL THE CURVES TO REFLECT THE CHANGES YOU HAVE MADE.
(2 marks)
Question 3:
( 8 marks)
Consider the market for cable-based Internet access service, which is a normal good. Explain whether the following events
would cause an increase or a decrease in demand or an increase or a decrease in the quantity demanded.
Each event must be represented by a sketch showing
the effect on the market.
a.
a.
Firms providing wireless (an alternative to
cable) Internet access services reduce their
prices.
b. Firms providing cable-based Internet
access services reduce their prices.
b.
c.
There is a decrease in the incomes earned by
consumers of cable-based Internet access
services.
c.
d.
d. Consumers’ tastes shift away from using
wireless Internet access in favour of cable-based
Internet access services.
Question 4:
( 8 marks)
Identify which of the following would generate a decrease in the market demand for e-book readers, which are a normal good
Explain your answer and draw a sketch of the market.
a. An increase in the price of downloadable apps used to enhance the e-book reading experience, which are complements
b. An increase in the number of consumers in the market for e-book readers
c. A decrease in the price of tablet devices, which are substitutes
d. A reduction in the incomes of consumers of e-book readers

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Explanation & Answer:
4 Long Answers

Tags:
demand and supply

economics

Unemployment Rate

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