O1105 ECONOMIC PRINCIPLES SEMESTER 2, 2011 ASSIGNMENT (20%)QUESTION1 Using demand and supply analysis and graph(s) explain the impacton price and quantity in the market for CD players if the price of CDsdecreased by 50 per cent. In youranswer explain the relationship between CDs and CD players and the adjustmentprocess leading to the new equilibrium point.QUESTION2 A few years back, an outbreak of chicken flu in Hong Kong leadsimultaneously to the destruction of millions of live chickens by the Hong Konggovernment and a sharp fall in people’s preference or taste for chicken.Using demand and supplyanalysis, what is the impact on price and quantity in the market for chicken?(HINT: The scenario in this question will affect both demand and supply) QUESTION3 Assume good A has an income elasticity of positive 4.5 and good Bhas an income elasticity of negative 2.5. a)What will be the percentage changes of quantity demanded of Good Aand Good B if income increased by 10 per cent b)What type of good is Good A? What type of good is Good B? Usingdemand and supply analysis and graph(s), show the impact on price and quantityin the market for Good A, if income decreased by 20 per cent. QUESTION4 Assume bothApples and Oranges have the same price elasticity of supply but different priceelasticities of demand. The price elasticity of demand for Apples isinelastic whilst the price elasticity of demand for oranges is elastic.Using demand and supply analysis and graph(s) COMPARE the impact onprice, quantity and total revenue if the supply of both Apples and Orangesincreased by the same amount. (HINT: Make sure when comparing the impact onprice, quantity and total revenue that you draw 2 graphs representing thedifferences in the price elasticity of demand for Apples and Or
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