Question #3 (5 Marks):

The table below shows the market demand and supply for Carrots in Dawson Creek.

Price: QD: QS:

0. 150. 80

3. 135. 100

6. 120. 120

9 105. 140

12 90 160

15 75. 180

1. Plot the demand and supply curve, and label the demand as D1, and the supply as S1. Show the equilibrium price and quantity on a graph.
2. What are the values of equilibrium price and quantity? Equilibrium Price = ______________
3. Equilibrium Quantity = ________________
4. If the price of Carrots was $12, would there be a surplus or shortage? By how much?
5. If the price of Carrots was $3, would there be a surplus or shortage? By how much?

Question #4 (5 Marks):

Brandon is considering his lunch purchase after teaching Principles of Economics. Unfortunately, the cafeteria doesn't have a very extensive menu: Apples, Bagels and Chicken are all $1 each. His utility from each is shown in the table below.

quantity: marginal utility apples: MU of bagels: MU of chicken:

1 50 90 150

2 38 80 140

3 33 60 100

4 25 40 60

5 15 20 20

A. Brandon has $5 to spend on lunch. How should he allocate his spending so as to maximize his total utility and what would be his utility?

Suppose instead Apples are $0.50 each, Bagels are $1 each, and Chicken is $2 each.

B. Brandon has $5 to spend on lunch. How should he allocate his spending so as to maximize his total utility with these new prices and what will be his utility?