Economics Department
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Economics Department |
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Essays - S&D equilibrium
This week's essay
1) An increase in price can lead to a decrease in quantity demanded, but an increase in demand can lead to an increase in price
a) Use supply and demand theory to explain this statement (10 marks) b) Discuss whether the two parts of the statement are always true (10 marks)
(Use diagrams to illustrate your answer)
Other essays
2) Explain the role that the rationing and signalling functions of the price mechanism play in avoiding some of the problems faced by planned economies (20 marks)
3) Assuming an initial situation where beef prices are determined freely by demand and supply, predict the effect of each of the following:
a) An increase in the price of chicken (5 marks) b) An increase in the price of cattle hides (the outside of cows - what keeps their intestines from falling out - used for leather) (5 marks) c) An increase in the price of cattle feed (5 marks) d) A subsidy paid to producers as an amount per cow slaughtered (5 marks)
4) Consider how demand and supply theory might be used to explain the following:
a) The higher than average wages earned by star footballers like Harry Kewell (5 marks) b) The tendency for unionised workers to earn on average more than non-unionised workers (5 marks) c) The higher wages of manual workers on north sea oil rigs compared with manual workers on the shore (5 marks) d) The tendency for university graduates to earn on average more than non-graduates (5 marks)
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