INSTITUTE OF BUSINESS MANAGEMENT

COLLEGE OF BUSINESS MANAGEMENT

ECO 409 Business Economics

Assignment # 3 Due Date: 05-10-2019

Note: Read Chapter 4 and go through the class lectures carefully before solving this
assignment.

1. What determines the quantity of a good that sellers supply?

2. What are the supply schedule and the supply curve, and how are they related? Why does the supply curve
slope upward?

3. Does a change in producers’ technology lead to a movement along the supply curve or a shift in the supply
curve? Does a change in price lead to a movement along the supply curve or a shift in the supply curve?

4. Tea and sugar are complements because they are often enjoyed together. When the price of sugar rises,
what happens to the supply, demand, quantity supplied, quantity demanded and the price in the market for tea?

5. Explain each of the following statements using supply and demand diagrams. [only diagram]
a. When there is a drought in southern Europe, the price of olive oil rises in supermarkets throughout Europe.
b. When the Olympic Games were held in London in 2012, the price of hotel rooms in central London rose
sharply.
c. When conflict breaks out in the Middle East, the price of petrol in Europe rises and the price of a used
Mercedes falls.

6. Using supply and demand diagrams, show the effect of the following events on the market for sweatshirts.
[explain step by step like we did in the class]

a. A drought in Egypt damages the cotton crop.

b. The price of leather jackets falls.
c. All universities require students to attend morning exercise classes in appropriate attire.
d. New knitting machines are invented.

Note: The assignment should be hand written on foolscap sheets.