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Quiz

ECO100Y1 Study Guide - Quiz Guide: Economic Equilibrium, Demand Curve

1 pages58 viewsFall 2017

Department
Economics
Course Code
ECO100Y1
Professor
peterfoltin
Study Guide
Quiz

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DEPARTMENT OF ECONOMICS ECO101: FALL 2017
UNIVERSITY OF TORONTO PETER FOLTIN
1
Tutorial 2: Competitive Markets
Purpose:
1. Demonstrate that competitive markets tend to equilibrium over time without any
external guidance or co-ordination between buyers and sellers.
2. See how shifts in demand or supply affect equilibrium outcomes.
3. Have some fun!
How to Prepare for Tutorial:
We will be playing a game in tutorials this week. To prepare (and help you play better), I
suggest:
1. Complete the questions below.
2. Review the instructions for MobLabs competitive market game:
https://moblab.wistia.com/medias/8a685i5xwv.
Pre-Tutorial Prep Problems
Note: not all problems will be taken up in tutorial; nor will solutions for these problems be
posted.
1. The Market for Oranges: Assume the market demand curve for oranges is

and the market supply curve for oranges is
  What is the
equilibrium price and quantity in this market.
2. Assume that the market price of bananas decreases.
a. Will this affect the market demand for oranges? Why or why not?
b. Will this affect the market supply for oranges? Why or why not?
c. What do you predict will happen to the equilibrium price and quantity of
oranges?
3. Suppose the inverse market demand curve for oranges becomes 
    and the inverse market supply curve for oranges is 
  . Find the new equilibrium price and quantity for oranges.
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