Question Name: -Teresa Webb

03 Jun Question Name: -Teresa Webb

Question
Name: -Teresa Webb

Course Number: -AB224

Section Number: -03

Unit Number: – 3

Date: -8/16/2013

Problem 1:

Suppose that the supply schedule of Belgium Cocoa beans is as follows:

Price of cocoa beans

(per pound)

Quantity of cocoa beans supplied

(pounds)

$40

900

$35

700

$30

500

$25

400

$20

200

Suppose that Belgium cocoa beans can be sold only in Europe. The European demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans

(per pound)

European Quantity of Belgium cocoa beans demanded

(pounds)

$40

100

$35

300

$30

500

$25

700

$20

900

a. Below is the graph of the demand curve and the supply curve for Belgium cocoa beans. From the supply and demand schedules above, what are the equilibrium price and quantity of cocoa beans from Belgium?

Slide1

Now suppose that Belgium cocoa beans can be sold in the U.S. The U.S. demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans

(per pound)

U.S. Quantity of Belgium cocoa beans demanded

(pounds)

$40

200

$35

400

$30

600

$25

800

$20

1000

b. What is the combined (total) demand schedule for Belgian cocoa beans that European and USA consumers buy?

Price of Belgium cocoa beans

U.S. Quantity of Belgium cocoa beans demanded

European Quantity of Belgium cocoa beans demanded

Total Demanded

(per pound)

(pounds)

(pounds)

(pounds)

$40

200

100

$35

400

300

$30

600

500

$25

800

700

$20

1000

900

Below is the supply and demand graph that illustrates the new equilibrium price and quantity of cocoa beans from Belgium.

Slide2

c. From the supply schedule and the combined U.S. and European demand schedule, what will be the new price at which Belgium plantation owners can sell cocoa beans?

d. What price will be paid by European consumers?

e. What will be the quantity consumed by European consumers?

European consumers will consume 500 pounds of cocoa beans.

Problem 2

On Tuesday nights, a local restaurant has a kid’s meal special. Nina’s son, Braden likes the restaurant’s chicken nuggets, but Braden seems to be growing bigger every day and the kid’s meal is usually not enough. The restaurant does allow for additional purchase of chicken nugget servings. Nina’s willingness to pay for each serving is shown in the table below.

Number of Chicken Nugget servings

(servings)

Willingness to pay for chicken nuggets

(per serving)

1

$5

2

$4

3

$3

4

$2

5

$1

6

$0

a.If the price of an additional serving of chicken nuggets is $3, how many servings will Nina buy for Braden? How much consumer surplus does he receive?

b.The following week, Nina and Braden are back at the restaurant again, but now the price of a serving of chicken nuggets is $4. By how much does his consumer surplus decrease compared to the previous week?

c.One week later, they return to the restaurant again. Nina discovers that the restaurant is offering an “all-you-can-eat” special for $12. How many chicken nugget servings will Braden eat, and how much consumer surplus does he receive now?

d.Suppose you own the restaurant and Braden is a “typical” customer. What is the highest price you can charge for the “all-you-can-eat” special and still attract customers?

Grading Rubric

Microeconomics: Unit 3 Assignment: Supply and Demand Curves; Consumer Surplus

Content

Points Possible

Points Earned

Problem 1: Supply and Demand Curves

· Used the demand and supply curve graph and the demand and supply schedules given for problem 1a to determine the equilibrium price

· Used the demand and supply curve graph and the demand and supply schedules given for problem 1a to determine the equilibrium quantity.

· Completed the chart by providing the combined (total) demand schedule at the various levels given for problem 1b.

· Determined the new price based on the supply schedule and combined U.S. and European demand schedule given for problem 1c.

· Determined the price that will be paid by European consumers for problem 1d.

· Determined the quantity consumed by European consumers for problem 1e.

12

Problem 2: Consumer Surplus

· Determined how many servings Nina is willing to buy for Braden and the consumer surplus for problem 2a.

· Determined how much the consumer surplus decreased compared to the previous week for problem 2b.

· Determined how many servings Braden will eat and for problem 2c.

· Determined the highest price that could be charged and still attract the consumer surplus for problem 2d.

8

Writing(5 pts)

Correct use of APA 6th edition format, all sources used to support the paper are referenced

2

Sentences are clear, concise, and direct; tone is appropriate, spelling, grammar, and punctuation are correct.

3

Total

25