WORKOUTS IN INTERMEDIATE MICROECONOMICS 8th

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1、Chapter1NAMETheMarketIntroduction.Theproblemsinthischapterexaminesomevariationsontheapartmentmarketdescribedinthetext.Inmostoftheproblemsweworkwiththetruedemandcurveconstructedfromthereservationpricesoftheconsumersratherthanthesmoothed"demandcurvethatweusedinthetext.Rememberthatthereserv

2、ationpriceofaconsumeristhatpricewhereheisjustindierentbetweenrentingornotrentingtheapartment.Atanypricebelowthereservationpricetheconsumerwilldemandoneapartment,atanypriceabovethereservationpricetheconsumerwillde-mandzeroapartments,andexactlyatthereservationpricetheconsumerwillbeindiere

3、ntbetweenhavingzerooroneapartment.Youshouldalsoobservethatwhendemandcurveshavethestair-case"shapeusedhere,therewilltypicallybearangeofpriceswheresupplyequalsdemand.Thuswewillaskforthethehighestandlowestpriceintherange.1.1(3)Supposethatwehave8peoplewhowanttorentanapartment.Theirreservatio

4、npricesaregivenbelow.(Tokeepthenumberssmall,thinkofthesenumbersasbeingdailyrentpayments.)Person=ABCDEFGHPrice=402530351018155(a)Plotthemarketdemandcurveinthefollowinggraph.(Hint:Whenthemarketpriceisequaltosomeconsumeri'sreservationprice,therewillbetwodierentquantitiesofapartmentsdemanded

5、,sinceconsumeriwillbeindierentbetweenhavingornothavinganapartment.)2THEMARKET(Ch.1)Price605040302010012345678Apartments(b)Supposethesupplyofapartmentsisxedat5units.Inthiscasethereisawholerangeofpricesthatwillbeequilibriumprices.Whatisthehighestpricethatwouldmakethedemandforapartmentsequ

6、alto5units?$18.(c)Whatisthelowestpricethatwouldmakethemarketdemandequalto5units?$15.(d)Withasupplyof4apartments,whichofthepeopleA{Hendupgettingapartments?A,B,C,D.(e)Whatifthesupplyofapartmentsincreasesto6units.Whatistherangeofequilibriumprices?$10to$15.1.2(3)Supposethatthereareoriginally5

7、unitsinthemarketandthat1ofthemisturnedintoacondominium.(a)SupposethatpersonAdecidestobuythecondominium.Whatwillbethehighestpriceatwhichthedemandforapartmentswillequalthesupplyofapartments?Whatwillbethelowestprice?Enteryouran-swersincolumnA,inthetable.Thencalculateth