Microeconomics 1. What are the inputs (land, labor and capital) in producing gold jewelry?

Briefly discuss the production process. (5 pts)

2. The following are four laws of supply and demand. Fill in the blanks for (b) and (d). Demonstrate each law with a supply-anddemand diagram (for a-d).

a. An increase in demand generally raises price and raises quantity demanded. (2 pts)
b.

c. d.

A decrease in demand generally __________ price and ___________ quantity demanded. (4 pts) An increase in supply generally lowers price and raises quantity demanded. (2 pts) A decrease in supply generally __________ price and __________ quantity demanded. (4 pts)

3. Rice is a staple food in the Philippines. Rice creates what anthropologists refer to as "the physiological sensation of satiety". For most Filipinos, no meal is complete without rice. Farmers produce rice by plowing arable lands with the use of hand tractors. Land owners hire people to work for them during planting and harvest season. Some of the rice that Filipinos consumed are also imported from countries like Thailand and Vietnam. Consider the following situation. Use a supply and demand diagram to answer the following questions.

a. Considering everything else constant, what will happen to the supply of rice if scientists were able to discover a new
breed of rice that bears more harvest? What will happen to equilibrium price and quantity? (5 pts)

b. Considering everything else constant, what will happen to demand for rice if a significant number of consumers decided c. d.
to implement a no rice diet to limit their carbohydrate consumption? What will happen to equilibrium price and quantity? (5 pts) Considering everything else constant, what will happen to supply of rice if a typhoon flooded farms in most part of the country? What will happen to equilibrium price and quantity? (5 pts) Considering everything else constant, what will happen to supply of rice if government suddenly decided to impose quota on the amount of rice that the Philippines imports from other countries? What will happen to equilibrium price and quantity? (5 pts)

4. From the following data, plot the supply and demand curves and determine the equilibrium price and quantity: (10 pts) Supply and Demand for Pizzas Price Quantity Quantity (Php per demanded supplied box of (boxes of (boxes pizza) pizza) pizza) 1000 0 40 800 10 30 600 20 20 400 30 10 200 40 0 0 125 0

of

What would happen if the demand for pizzas tripled at each price? (3 pts) What would occur if the price were initially set at Php 400 per pizza? (3 pts) 5. The liters of diesel that jeepney drivers demand fell to 90 liters, from their daily consumption of 100 liters, when the price of diesel per liter rose to Php40 from Php34. Compute for the price elasticity of demand. Is demand elastic, inelastic or unit elastic? (10 pts)