Question 1

Market demand is given as Qd = 200 - 3P.Market supply is given as Qs = 2P + 100.What would result if the market price were $30? &#160;&#10;A)&#160;a shortage of 110&#160;&#10;B)&#160;a surplus of 110&#160;&#10;C)&#160;a surplus of 50&#160;&#10;D)&#160;a shortage of 50

Accepted Answer

&#160;a shortage of 110&#160;

Question 2

Market demand is given as Qd = 100 - 2P.Market supply is given as Qs = P + 10.What would result if the market price were $40? &#160;&#10;A)&#160;a shortage of 30&#160;&#10;B)&#160;a surplus of 60&#160;&#10;C)&#160;a surplus of 30&#160;&#10;D)&#160;a shortage of 60

Accepted Answer

Substitute P = $40 into both demand and supply equations to obtain:

Qd = 100 - 2($40) = 20
Qs = $40 + 10 = 50

At the price of $40, quantity demanded is 20 units and quantity supplied is 50 units, which creates a surplus (Qs > Qd) of 30 units. Therefore, the correct answer choice is (C).

Question 3

Market demand is given as Qd = 100 - 2P.Market supply is given as Qs = P + 10.What would result if the market price were $20? &#160;&#10;A)&#160;a shortage of 30&#160;&#10;B)&#160;a surplus of 60&#160;&#10;C)&#160;a surplus of 30&#160;&#10;D)&#160;a shortage of 60

Accepted Answer

&#160;a shortage of 30&#160;

Question 4

Market demand is given as QD = 200 - 3P.Market supply is given as QS = 2P + 100.Which legally imposed price would constitute a binding price floor? &#160;&#10;A)&#160;$10&#160;&#10;B)&#160;$20&#160;&#10;C)&#160;$50&#160;&#10;D)&#160;$70

Accepted Answer

A binding price floor is set above the equilibrium price. To find the equilibrium price, set QD = QS: 200 - 3P = 2P + 100. Solving this equation gives P = $20 as the equilibrium price. Therefore, a price floor above $20, such as $50, would be binding.

Question 5

Market demand is given as Qd = 40 - 2P.Market supply is given as Qs = 2P.In a perfectly competitive equilibrium, what will be price and quantity traded in the market? &#160;&#10;A)&#160;Price will be $20, and quantity will be 10.&#160;&#10;B)&#160;Price will be $20, and quantity will be 40.&#160;&#10;C)&#160;Price will be $10, and quantity will be 20.&#160;&#10;D)&#160;Price will be $40, and quantity will be 20.

Accepted Answer

In a perfectly competitive equilibrium, market demand equals market supply. Therefore, we can equate Qd and Qs and solve for P and Q.
Qd = Qs
40 - 2P = 2P
40 = 4P
P = 10 
Substitute P=10 back into either Qd or Qs to solve for Q.
Qd = 40 - 2P = 40 - 2(10) = 20 
Therefore, the equilibrium price is $10, and the equilibrium quantity is 20.

Question 6

Exhibit 4A-1&#10;  &#10;Refer to the exhibit.At the equilibrium price, what would consumer surplus be? &#160;&#10;A)&#160;$480&#160;&#10;B)&#160;$640&#160;&#10;C)&#160;$1120&#160;&#10;D)&#160;$1280

Accepted Answer

Consumer surplus is the area above the price level and below the demand curve, up to the quantity traded. At the equilibrium price, the consumer surplus is represented by the triangle with a base of 40 units (the quantity) and a height of $24 (the difference between the highest price a consumer is willing to pay and the equilibrium price). The area of this triangle is 1/2 * base * height = 1/2 * 40 * 24 = $480.

Question 7

Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price ceiling? &#160;&#10;A)&#160;$10&#160;&#10;B)&#160;$30&#160;&#10;C)&#160;$40&#160;&#10;D)&#160;$60

Accepted Answer

A binding price ceiling is set below the equilibrium price. The equilibrium price is found where QD = QS, which is at P = $30. Therefore, a price ceiling below $30, such as $10, would be binding.

Question 8

Market demand is given as Qd = 60 - P.Market supply is given as Qs = 3P.What would result if the market price were $30? &#160;&#10;A)&#160;a shortage of 60&#160;&#10;B)&#160;a surplus of 60&#160;&#10;C)&#160;a surplus of 30&#160;&#10;D)&#160;a shortage of 30

Accepted Answer

At a price of $30, the quantity demanded (Qd) would be 60 - 30 = 30, and the quantity supplied (Qs) would be 3*30 = 90. The difference between Qs and Qd is 90 - 30 = 60, indicating a surplus of 60.

Question 9

Market demand is given as Qd = 200 - 3P.Market supply is given as Qs = 2P + 100.In a perfectly competitive equilibrium, what will price and quantity be? &#160;&#10;A)&#160;Price will be $20, and quantity will be 140.&#160;&#10;B)&#160;Price will be $50, and quantity will be 260.&#160;&#10;C)&#160;Price will be $100, and quantity will be 300.&#160;&#10;D)&#160;Price will be $140, and quantity will be 380.

Accepted Answer

In a perfectly competitive market, equilibrium occurs where quantity demanded equals quantity supplied (Qd = Qs). Substituting the given equations: 200 - 3P = 2P + 100. Solving for P gives P = $20. Substituting P = $20 into either the demand or supply equation gives Q = 140.

Question 10

Exhibit 4A-1&#10;  &#10;Refer to the exhibit.At the equilibrium price, what would producer surplus be? &#160;&#10;A)&#160;$480&#160;&#10;B)&#160;$640&#160;&#10;C)&#160;$1120&#160;&#10;D)&#160;$1280

Accepted Answer

To find the equilibrium price, we look for the point where the supply and demand curves intersect. In this case, it occurs at a price of $16. At this price, the quantity supplied is 40 units and the quantity demanded is also 40 units. 
To find producer surplus, we need to find the difference between the price that producers receive and their marginal cost of production. At a price of $16, the marginal cost is $8 (where the supply curve intersects the y-axis), so the producer surplus per unit is $8. 
Thus, total producer surplus is $8 x 40 = $320. To find total economic surplus, we also need to find consumer surplus, which is also $320 (the area above the demand curve and below the equilibrium price). Total economic surplus is the sum of producer and consumer surplus, which is $640. Therefore, the best choice is B.

Question 11

Market demand is given as Qd = 100 - 2P.Market supply is given as Qs = P + 10.In a perfectly competitive equilibrium, what will be price and quantity traded in the market? &#160;&#10;A)&#160;Price will be $40, and quantity will be 30.&#160;&#10;B)&#160;Price will be $35 and quantity will be 30.&#160;&#10;C)&#160;Price will be $30, and quantity will be 40.&#160;&#10;D)&#160;Price will be $25, and quantity will be 50.

Accepted Answer

The answer of Market demand is given as Qd =...

Question 12

Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price floor? &#160;&#10;A)&#160;$60&#160;&#10;B)&#160;$45&#160;&#10;C)&#160;$30&#160;&#10;D)&#160;$15

Accepted Answer

The answer of Market demand is given as QD =...

Deck 4: A: Appendix an Algebraic Approach to Demand, Supply, and Equilibrium