Cable TV HouseholdsSupply of SeatsSupplyProblem Assignments and ReadingsEconomics 201Professor R. FisherFALL 1998© Ronald C. Fisher, 1998These assignments are due in class on the day assigned according to the class schedule. They will be collected and graded on a credit (4 points) -no credit (0 points) basis. The grade depends only on whether you turned the assignment in on time and whether you made a sincere effort to answer the questions. Assignments turned in late will not receive credit. Regardless of the format of the problem, you should always show how you arrived at your answer and include substantial explanation. It is not sufficient merely to state an answer ("12" or "B").Fall 1998 ECONOMICS 201 R. FisherAssignment No. 1 Due: September 101. Colander, Chapter 3, Problem #2.2. Colander, Chapter 3, Problem #4.3. When the price of a commodity like coffee increases, some consumers usually come up with the idea of a buyer's strike. That is, they propose to buy no coffee in order to drive the pricedown.a. If the strike is successful, who gains?b. What gain goes to those who boycott?c. Would you join or only advise others to join the boycotts?d. What do you think will happen to the price of tea during theboycotts? Explain all answers.4. The Wall Street Journal reported that in 1985 good deals were available in the fall on used cars because the automobile manufacturers offered summer sales incentives on new cars thatleft dealers with a gut of trade-ins. Since the incentives began, used car prices fell 12.5%. During the same period in the previous year, when there were no new car sales incentives, and car prices fell only 3.2%. The new car incentives included rebates and low-interest loans. Record numbers of new cars were sold in August and September, and many buyers traded in used cars. And some buyers who might have purchased late-model used cars switched to new cars because of the incentives. Draw separate supply and demand diagramsfor "new cars" and "used cars" and show the changes described. Are new and used cars substitutes or complements? Why?5. Copeland, Workbook, Chapter 4, Problem #7.Fall 1998 Economics 201 R. FisherAssignment No. 2Due: September 171. Colander, Chapter 8, Problem #1.2. Read the following excerpt and then answer the three questions.As a result of an increase in public transit fares in New York, the New York Times reported: "Comparing September, 1975, and September, 1974, the M.T.A. (Metropolitan Transit Authority) reported these changes on its transit and commuter facilities:Bus ridership declined 12.7 percent to 46.2 million from 53.0 million . . . Subway ridership declined 5.2 percent to 79.3 million from 83.65 million . . . .The increase in the transit fare from 35 to 50 cents produced a 33.5 percent gain in subway revenue in September compared with a year ago . . . and an 18.4 percent increase in bus revenue . . ."I. Comparing 1974 to 1974 and assuming that only price changed over this period, the demand for bus transportation in New York isA. Elastic because ridership fell in response to the price increaseB. Perfectly inelastic, because bus riders have no other alternative than to ride the busC. Inelastic, because bus revenue increased as a result of the fare increaseD. 2.6II. Again comparing 1975 to 1974 and assuming no other changes, a comparison of thedemand for buses and subways shows thatA. The demand for subway rides is relatively more price inelastic than the demand for bus ridesB. Both the demand for bus and subway rides is price elasticC. Subway riders are more sensitive to fare changes than bus ridersD. The demand for bus rides is relatively less price elastic than the demand for subway ridesIII. Among the possible explanations for this behavior, which of the following would be consistent with the observations?A. Bus riders tend to be poorer, on average, than subway riders.B. Commuters comprise a larger share of subway than bus riders, while buses have more shoppersC. The average length of a bus ride tends to be very much shorter than the average subway tripD. All of the aboveE. None of the above3. In April 1995 it was reported that:Copper prices continued their slide on signs that demand might be weakening. Copper for May delivery fell 3.4 cents, to $1.2825 a pound, its lowest price since March 15. A report to be released on factory orders for durable goods like automobiles and kitchen appliances, which typically use large amounts of copper, is expected to show a decline. The slow down in the USA is taking hold in both housing and automobiles.On other commodity markets, crude oil prices fell as repairs to a broken pipeline in the North Sea proceeded faster than expected. Crude oil for June deliver fell 29 cents, to $20.12 a barrel. May unleaded gasoline fell 0.99 cents, to 61.21 cents a gallon.a. Assuming that the markets for both copper and oil are competitive, use supply and demand analysis to show and explain i ) the relationship between the markets for cars/houses and the market for copper and ii) why copper prices have declined.b. Similarly, use supply and demand analysis to show and explain i) why crude oil prices declined and ii) the relationship between the markets for crude oil and unleaded gasoline. c. Suppose it is also known that the broken North Sea pipeline had been expected to reduce crude oil output by .5 percent. Given the observed oil price change, calculatean estimate of the short run price elasticity of demand for crude oil.4. Read the following information and then answer the true/false questions.Maple Syrup prices soared for a second year. A combination of warm weather and maple-tree die-off from acid rain again reduced the syrup supply. One farm’s output fell to only 1,200 gallons this year, compared with a normal 4,200. Another’s fell only 30% to 5,000 gallons.A gallon of syrup sells for $35 at one outlet inMassachusetts, up from $25 a year ago. Some producers charge more. One concern is that the higher prices will scare off food processors and consumers. But one producer noted that "It's a unique product and demand remains firm." TRUE OR FALSE?1. As a result of the decrease in supply of maple syrup, demand is expected to decreasealso.2. According to the article, the producers believe that the demand for maple syrup is price inelastic.3. If demand is price inelastic, then the reduction in syrup supply will reduce revenue tosyrup producers.4. If new firms enter the maple syrup