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Question 1: This assignment is about the market for Masks in Ontario, the kind that people wear to protect themselves from COVID-19

Economics

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Question 1:

This assignment is about the market for Masks in Ontario, the kind that people wear to protect themselves from COVID-19.  Given below are the demand schedule and supply schedule for this product for one week. Accurately graph the demand and supply curves on one graph and determine equilibrium in this market.  Label the graph properly, including the axes.  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 Demanded	Quantity Supplied
$8	1,00,00,000	15,00,000
$9	80,00,000	30,00,000
$10	70,00,000	45,00,000
$11	60,00,000	65,00,000
$12	50,00,000	70,00,000
$13	40,00,000	90,00,000
$14	30,00,000	1,05,00,000
$15	25,00,000	1,20,00,000

 

Question 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 left or to the right) or will there be no impact in the curve. (3 marks – ½ mark each)

Event #	Event	Affected determinant	Impact on Demand curve
Example	Ontariens Income goes up as a result of a drop in the tax rate, assume masks are a normal good.	Change in incomes	Demand should increase, the curve moves ot the right.
1	Many people move to Ontario because it is awesome.
2	The price of face shields drop.  (Assume that public health authorities have given citizens the choice of masks or shields.)
3	Public health officials have a press conference saying that they believe that by year end, mask mandates should be lifted, but caution that this could change.
Event #	Event	Affected determinant	Impact on supply curve
4	The price of fabrics, popular for making masks goes up significantly.
5	Demand for masks increases.
6	A new technology makes it faster to make masks.

 

Question 3:

Illustrate Scenario #3 from question 2 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.  State whether the price went up or down.  State whetther the quantity wnet up or down. (3 marks – 1 mark for correct graph, 1 mark for correct change, 1 mark for identifying new equilibrium.) 

 

Question 4:

The chart below represents the production possibilities for a company that produces ereaders and tablets. (3.5 marks)

a. Create a properly labeled graph representing the company’s combination of choices for these two products. (2 marks)

b. Using the letter ‘U’ indicate on the graph unattainable combinations. (0.5 mark)

c. Using the letter ‘A’, indicate on the graph the attainable but inefficient. (0.5 mark)

d. Using the letter ‘F’ indicate the combinations that are both attainable and efficient.  (0.5 mark)

Production Possibility Curve
Tablets	Ereaders
0	20,00,000
90,000	18,00,000
1,70,000	15,00,000
2,50,000	9,00,000
3,00,000	0

 

Question 5:

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.  (3.5 marks)

Price	Quantity Demanded	Elasticity of Demand	Quantity Supplied	Elasticity of Supply
$8	1,00,00,000		15,00,000
$9	80,00,000		30,00,000
$10	70,00,000		45,00,000
$11	60,00,000		60,00,000
$12	50,00,000		75,00,000
$13	40,00,000		90,00,000
$14	30,00,000		1,05,00,000
$15	25,00,000		1,20,00,000

 

Question 6:

If the price of an inelastic good rises from $11 to $10 will total revenue go up or down? Explain. (2 marks).