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A doctoral student has just completed a study for her dissertation and found the following demand and supply schedules for hand held computers to be as follows: Price/Computer Quantity Demanded Quantity Supplied $200 1000 2200 175 1250 2050 150 1500 1900 125 1750 1750 100 2000 1600 75 2250 1450 50 2500 1300 25 2750 1150 Questions: Using Microsoft Excel, draw a graph illustrating the supply and demand in this market. What is the equilibrium Price and Quantity in the market? Now suppose the government imposes a special tax on these computers. Describe what would happen in this market in terms of the supply and demand curve. Disregard the new tax in part three. Now assume that the government imposes a price ceiling of $100 in this market, as a result of protests of price gauging by the sellers. What would happen to the price and quantity in this market? Disregard the events of part four. Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being an essential for college students but they are considering halting production due to the lack of profits. The lawmakers agree and now set a price floor at $150. What would happen in this market? If consumers’ expectations were such that they were concerned about the economy and jobs, what would you think would happen in this market?
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