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Concordia University
  Department of Economics

  ECON 201 – INTRODUCTION TO MICROECONOMICS

  Assignment #1

  Written by:
  Jad El-Rifai, 3981401

  Wednesday February 11th 2004.

  1. The market forces of Supply and Demand.

        a. Plotting the Demand and supply Curve.
          The following Table Illustrates the values used in the plotted graphs.

        |Price Per Unit ($)       |Quantity Demanded             |Quantity Supplied           |
|                          |                              |                            |
|8                         |1                             |10                         |
|6                         |2                             |8                           |
|4                         |3                             |6                           |
|2                         |4                             |4                           |
|1                         |5                             |2                           |
|0.5                       |6                             |0                           |

        The resulting graph is illustrated below.

      [pic]
        b. Finding the Equilibrium point
          Plotted on the graph, as well as seen clearly in the table, the equilibrium is established for the price of $2.00. In fact, at this price, the supply equals the demand at 4 units.

        c. The Law of Demand and the Law of Supply (Price Increase)
          According to the Law of Demand, if all other things remain constant, an increase of price (from the equilibrium price of $2) to $6 would decrease the quantity of comic books demanded to 2.   Similarly, also provided all other things remain constant, the Law of Supply dictates that the number of comic books supplied would rise to 8. This creates a situation of excess supply, or surplus, and would lead to an increased inventory size for the suppliers.

        d. The Law of Demand and the Law of Supply (Price Decrease)...