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What are the equilibrium price and quantity traded

Question 1

Anna Pastry has just recently competed in a well-known TV reality cooking show. During her time on the show she made her name for herself being the “Pastry Queen”. On leaving the show, Anna decided to rent a small shop in South Melbourne market and started selling her pies.

The weekly demand and supply schedules for her blueberry pies (in thousands) are given in the table below:

(a) Using EXCEL, plot the demand and supply curves.

(b) What are the equilibrium price and quantity traded?

(c) Assume that during the wintry months, there has been an increase in demand for Anna’s pies by 4 thousand pies. Draw the new demand curve.

(d) What are the new equilibrium price and quantity traded? (10 marks)

Question 2

Assume that interest rates have recently risen, and housing shortages have created a rental crisis in Melbourne. In the absence of rent controls, the free forces of demand and supply will create the equilibrium levels. Draw a diagram to illustrate the equilibrium rental price of $1200 per month, and quantity of 4000 rental dwellings. What would be the effect if a rent ceiling of $1000 per month was imposed on the market? Show this in your diagram. In your opinion, should the rent control be implemented or should the free forces of demand and supply be allowed to determine equilibrium in the rental market. Explain your reasoning. Week 7 20% Price($) Quantity Demanded Quantity Supplied 8 12 36 7 16 32 6 20 28 5 24 24 4 28 20 3 32 16 2 56 12 1 40 8 School: Business, Innovation and Entrepreneurship Department: Business, Management and Finance Semester 1 2017 Page 4 of 7 pages (5 marks)

Question 3

What type of a market structure does the fast food restaurants such as Hungry Jacks, McDonalds, KFC, Dominoes Pizzas operate in? Explain your answer. (This question requires you to do some research to provide examples to back your discussion).

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