Free Response Questions

Topic 1: Supply and Demand

Refer to the content in Weeks 3 and 4, as well as your notes and example.

Parts 1 and 2

Create a problem for a product of your choice with the following characteristics:

  • The supply curve is linear with a slope of your choice
  • The demand curve is perfectly inelastic at a quantity of your choice

Then, find the following:

  1. The initial equilibrium price and quantity, both graphically and mathematically
  2. The producer surplus
  3. Calculate the elasticity of demand

Next, implement a change in either supply or demand (the curve that changes and the direction of the change is up to you) both in the equations and graphically. Finally, recalculate the new answers for A, B, and C (above).

Part 3

Find a market with characteristics similar to the ones from the problem you chose. Then, describe why it is similar and why it might not be. Next, describe both supply and demand. Make sure you have at least 3 reliable sources (newspaper articles, scholarly papers, et cetera).