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Department of Economics
Assignment #1
Written by:
Jad El-Rifai, 3981401
8 1 10
6 2 8
4 3 6
2 4 4
1 5 2
0.5 6 0
6
Price of each comic book
5
Demand
Supply
4
0
0 1 2 3 4 5 6 7 8 9 10
Quantity of comic books
8 1 10 4
6 2 8 5
4 3 6 6
2 4 4 7
1 5 2 8
0.5 6 0 9
This increase of demand shifts the demand curve to the right, as illustrated
in the updated graph below. This graph is the same as in (a) but the shifted
demand curve has been added as a dotted line.
Demand and Supply Curves for Comic Books
6
Price of each comic book
5
Demand
Supply
4 Shifted Demand
0
0 1 2 3 4 5 6 7 8 9 10
Quantity of comic books
The results of all the calculations are displayed in the table below.
The negative values have been left as so to illustrate the direction of the
respective curves. However, for the rest of the answers, the absolute value
of these numbers will be considered.
Q − Q0
Q P − P0
Ed = (b) / (a) = and Sd =
P − P0 Q − Q0
P
Q Q − Q0
If we multiply Ed by we obtain which is the inverse
P P − P0
of Sd. Therefore, we could say the following:
P
Sd = = |-2| = constant
Q × Ed
4 4
For Q = 6 and P =4, Sd = = = 2. The test is successful and the
6 × 0.333 2
relationship is verified.