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bandicam 2020-02-29 19-52-19-221

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Good morning everyone. We are Group 1 and I am Ken (Wong Kwok Ho). We'll talk about question 1.1 to 2.2 today. And I will present you with question 1.1a to 2.1a. I will start with question 1.1a first. There are two sentences here. What's wrong with the first sentence? Actually, with the increase of demand, the price of Internet services will increase. Therefore, "decrease" here is wrong. More people demand computers. The demand curve will shift to the right. We can see here from the graph. The demand curve will shift from the blue curve to the green curve. And the equilibrium price will increase. The intersection point between the red curve and the blue curve will shift to a higher position and towards right That means the equilibrium price increases. And the second sentence . The "fall" here will become "increase" because the "fall" is incorrect. As we mentioned above here, it should be "increase". The price of Internet service will increase. Therefore, it will be corrected to "The 'increase' in the price of the Internet service decreases the supply of Internet service." Here, the "decreases" in "decreases the supply of Internet service." is incorrect. Because if the price increases, there will be an increase in quantity supplied. And the supply will become unchanged and there's no shifting of supply curve. Only the quantity supplied increases. Ok, for question 1.1b, The Reservation price here is the lowest price which supplier is willing to sell the cakes. The baker will only sell the cakes if market price is larger than or equal to reservation price. Therefore, the quantity supplied (per day) will be accumulated along the market price because if we can see here, we take row 4 as an example. The producer who sells the cake with his/her own market price (row 1: $10). His/her reservation price is also $10. However, when the market price is $20, the producer who sells cakes at $10 before is also willing to sell cakes at $20. Therefore, when the market price is $50, the producers of reservation price of $40, $30, $20, $10 are also willing to buy cakes at $50. Therefore, the quantity supplied in row 4 will accumulate along the number of producers below row 4 (also add the number of producers at reservation price $50). Therefore, at the end, the quantity supplied at row 1 (reservation price: $80) will be equal to the total number of producers along the table, which is 330. OK, for question 1.1b, And The Law of Supply here, the lower the price of the good, the smaller the quantity will be supplied and other things being equal and vice versa That means the higher the price of a good, the higher the quantity will be supplied. We can see from the diagram here. The higher the market price, the more the quantity will be supplied per day . This is a positive relationship between price and quantity supplied. When the price rises, the quantity supplied will also increase. If the price is $10, quantity supplied is 50. If the price is $30, quantity supplied is 110. Therefore, it is consistent with the law of supply. Ok, for question 2.1, And 2.1a will be Ok, when supply increases because of more engineering graduates, the supply curve shifts to the right. And the demand also increases so the demand curve shifts right Therefore, both curves shift to the right. However, how will the equilibrium market price and quantity change? There are 2 circumstances. Blue curve and Red curve represent the original demand curve and original supply curve respectively.

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Duration: 8 minutes and 21 seconds
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Language: English
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Posted by: stupidfung on Feb 29, 2020

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