Question 1

In which of the following cases will the effect on equilibrium output be indeterminate (i.e.,depend on the magnitudes of the shifts in supply and demand)?

Accepted Answer

When demand decreases and supply increases, the effect on equilibrium output will depend on the magnitudes of the shifts. If the decrease in demand is larger than the increase in supply, equilibrium output will decrease. If the increase in supply is larger than the decrease in demand, equilibrium output will increase. Therefore, the effect on equilibrium output is indeterminate.

Question 2

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ Let supply remain constant; an increase in income causes consumers to be willing and able to buy 220 more units at each price than they were previously.The new equilibrium price and quantity are

Accepted Answer

The answer of Use the following demand and supply functions:...

Question 3

Suppose that more people want Orange Bowl tickets than the number of tickets available.Which of the following statements is correct?

Accepted Answer

Option A is correct because when more people want Orange Bowl tickets than the number of tickets available, there is a shortage of tickets at the box office price. 
Option B is not correct because we don't know whether the box office price is above or below the equilibrium price. 
Option C is correct because if the box office price were raised, some people who wanted to buy the tickets will not be able to afford them, so the excess demand for the tickets will decrease. 
Therefore, options A and C are correct, and the answer is D.

Question 4

Scientists have developed a bacterium they believe will lower the freezing point of agricultural products.This innovation could save farmers $1 billion a year in crops now lost to frost damage.If this technology becomes widely used,what will happen to the equilibrium price and quantity in,for example,the potato market?

Accepted Answer

The decrease in frost damage and increase in crop yield will shift the supply curve to the right, causing a decrease in equilibrium price and an increase in equilibrium quantity. Therefore, the correct answer is B.

Question 5

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R}$ is the price of a related good,R.Income is $100,000,the price of the related good is $20,and the supply function is Q_s = 150 + 5P.What is the equilibrium price?

Accepted Answer

To find the equilibrium price, set the quantity demanded equal to the quantity supplied and solve for P. Substituting the given values into the demand equation gives $Q_d = 100 - 5P + 0.004(100,000) - 5(20)$. Simplifying this gives $Q_d = 100 - 5P + 400 - 100 = 400 - 5P$. The supply function is given as $Q_s = 150 + 5P$. Setting $Q_d = Q_s$ gives $400 - 5P = 150 + 5P$. Solving for P, we get $10P = 250$, so $P = 25$.

Question 6

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ If the price is currently $11,there is a

Accepted Answer

To determine if there is a surplus or shortage, we calculate the quantity demanded and supplied at the given price of $11. For the demand: $Q_d = 900 - 60(11) = 900 - 660 = 240$. For the supply: $Q_s = -200 + 50(11) = -200 + 550 = 350$. Since $Q_s > Q_d$, there is a surplus of $350 - 240 = 110$ units.

Question 7

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.If income increases to $100,000 and the price of the related good is now $20,what is the demand function?

Accepted Answer

Substitute $M=100000$ and $P_R=20$ in the demand function: 
$Q_d=100-5P+0.004(100000)-5(20)=400-5P$ 
Thus, the demand function is $Q_d=400-5P$.

Question 8

Suppose that the market for engagement rings is in equilibrium.Then political unrest in South Africa shuts down the diamond mines there.South Africa is the world's primary supplier of diamonds.What will happen?

Accepted Answer

The shutdown of diamond mines in South Africa, a primary supplier, would reduce the supply of diamonds, leading to a decrease in the equilibrium quantity of engagement rings since diamonds are a key component. This does not directly affect the demand for engagement rings but impacts the supply side, leading to potential changes in price and quantity available in the market.

Question 9

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.From the demand function it is apparent that related good R is

Accepted Answer

A complement is a good that is typically consumed together with another good, so a decrease in the price of one good will increase the demand for the other good. In this demand function, the quantity demanded of good X decreases as the price of the related good R decreases. Therefore, R is a complement for X.

Question 10

With a given supply curve,a decrease in demand leads to

Accepted Answer

With a decrease in demand, there will be excess supply at the current price, leading to a decrease in the equilibrium price. At the lower price, some suppliers may choose to leave the market, leading to a decrease in the equilibrium quantity. Therefore, both the equilibrium price and equilibrium quantity decrease.

Question 11

Refer to the figure below:  In the figure,the equilibrium price and quantity are

Accepted Answer

The equilibrium occurs where the demand and supply curves intersect. In this case, it is at a price of $6 and a quantity of 300. Option A is incorrect because the quantity demanded at $6 is only 300, not 800. Option B is incorrect because the quantity supplied at $4 is only 300, not 800. Option C is incorrect because the price is $6 at 400, not $4. Option D is correct because it correctly identifies the equilibrium price and quantity. Option E is incorrect because the price is $6, not $7.

Question 12

Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to

Accepted Answer

An increase in wage rates for coal miners will increase the cost of producing coal, which will shift the supply curve to the left. A decrease in the price of natural gas will make it a more attractive substitute for coal, which will shift the demand curve to the left. As a result, the equilibrium price of coal may rise, fall or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal will fall.

Question 13

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.What is the demand function when M = $50,000 and $P _ { R}$ = $10?

Accepted Answer

The answer of Use the following general linear demand relation:...

Question 14

A "puppy boom" and an increase in the price of horse meat would cause the market price of dog food to

Accepted Answer

A "puppy boom" increases the demand for dog food, which tends to raise its price. An increase in the price of horse meat, a potential ingredient in dog food, raises production costs, also pushing up the price. The market output could rise, fall, or remain unchanged depending on how these factors interact.

Question 15

Refer to the figure below:  Let supply remain constant at S; an increase in the price of a substitute good causes consumers to be willing and able to buy 150 more units of the good at each price in the list than they were when demand was D.Which of the following statements is (are)true?

Accepted Answer

With the increase in the price of a substitute good, the demand for the given good will increase. This means that the demand curve will shift to the right from D to D'.

At the original equilibrium point E, where supply curve S intersects demand curve D, the quantity demanded is Q=$400 and the price is P=$7.

With the increase in demand by 150 units at each price, the demand curve will shift to the right to D'. The new equilibrium point will be E', where supply curve S intersects demand curve D'.

At the new equilibrium point E', the quantity demanded will be Q=$450 and the price will be P=$6. Therefore, Choice C is true.

At point E, there will be excess supply because the quantity supplied is more than the quantity demanded. With the increase in demand, the excess supply will reduce but it will not completely disappear. Therefore, there will still be a shortage of 150 units at price P=$7. Hence, Choice A is also true.

Therefore, both choices A and D are true, making choice E the correct answer.

Question 16

Refer to the figure below:  Let supply remain constant at S; a decrease in income causes consumers to be willing and able to purchase 150 fewer units at each price than they were previously.

Accepted Answer

The answer of Refer to the figure below:  Let...

Question 17

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ Equilibrium price and output are

Accepted Answer

To find the equilibrium price and output, we need to set the demand and supply functions equal to each other:

$$ 900 - 60 p = -200 + 50 p $$

Solving for p, we get:

$$110p = 1100$$

$$p = 10$$

Now that we have the equilibrium price, we can use either the demand or supply function to find the equilibrium quantity. Plugging the equilibrium price into the demand function, we get:

$$Q_d = 900 - 60(10) = 300$$

Therefore, the equilibrium price and output are P = $10 and Q = 300.

Question 18

Refer to the figure below:  Let demand remain constant at D; an increase in wages causes firms to be willing and able to sell 150 fewer units at each price than they were before the wage increase.

Accepted Answer

Since demand remains constant at D, the change in quantity supplied is solely due to the increase in wages. We can see that the supply curve shifts to the left from S1 to S2, indicating that at each price level firms are willing and able to sell 150 fewer units.

At the initial equilibrium point, the price is P = $8 and the quantity is Q = 400. When the supply curve shifts to the left, the new equilibrium point will occur at the intersection of the demand curve and the new supply curve S2. The new equilibrium price will be higher (since there is a decrease in supply) and the new equilibrium quantity will be lower (since firms are willing and able to sell fewer units).

From the graph, we can see that the intersection of the demand curve and the new supply curve occurs at P = $7 and Q = 250. Therefore, choice C is the correct answer.

Question 19

So long as the actual market price exceeds the equilibrium market price,there will be

Accepted Answer

When the actual market price is above the equilibrium price, it means that the quantity supplied exceeds the quantity demanded, leading to a surplus. This surplus puts downward pressure on the price as sellers compete to sell their excess goods, driving the price towards equilibrium.

Question 20

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R}$ is the price of a related good,R.If M = $50,000 and $P _ { R }$ = $10 and the supply function is $Q _ { 5 } = 150 + 5 P$ ,market price and output are,respectively,

Accepted Answer

The answer of Use the following general linear demand relation:...

Quiz 2: Demand,supply,and Market Equilibrium

In which of the following cases will the effect on equilibrium output be indeterminate (i.e.,depend on the magnitudes of the shifts in supply and demand) ?

Suppose that more people want Orange Bowl tickets than the number of tickets available.Which of the following statements is correct?

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ If the price is currently $11,there is a

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.If income increases to $100,000 and the price of the related good is now $20,what is the demand function?

Suppose that the market for engagement rings is in equilibrium.Then political unrest in South Africa shuts down the diamond mines there.South Africa is the world's primary supplier of diamonds.What will happen?

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.From the demand function it is apparent that related good R is

With a given supply curve,a decrease in demand leads to

Refer to the figure below: In the figure,the equilibrium price and quantity are

Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to

Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R }$ is the price of a related good,R.What is the demand function when M = $50,000 and $P _ { R}$ = $10?

A "puppy boom" and an increase in the price of horse meat would cause the market price of dog food to

Refer to the figure below: Let supply remain constant at S; an increase in the price of a substitute good causes consumers to be willing and able to buy 150 more units of the good at each price in the list than they were when demand was D.Which of the following statements is (are) true?

Refer to the figure below: Let supply remain constant at S; a decrease in income causes consumers to be willing and able to purchase 150 fewer units at each price than they were previously.

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ Equilibrium price and output are

Refer to the figure below: Let demand remain constant at D; an increase in wages causes firms to be willing and able to sell 150 fewer units at each price than they were before the wage increase.

So long as the actual market price exceeds the equilibrium market price,there will be

Quiz 2: Demand,supply,and Market Equilibrium

In which of the following cases will the effect on equilibrium output be indeterminate (i.e.,depend on the magnitudes of the shifts in supply and demand) ?

Suppose that more people want Orange Bowl tickets than the number of tickets available.Which of the following statements is correct?

Use the following demand and supply functions: Demand: Qd=900−60pQ _ { d } = 900 - 60 pQd​=900−60p Supply: Qs=−200+50PQ _ { s } = - 200 + 50 \mathrm { P }Qs​=−200+50P If the price is currently $11,there is a

Suppose that the market for engagement rings is in equilibrium.Then political unrest in South Africa shuts down the diamond mines there.South Africa is the world's primary supplier of diamonds.What will happen?

With a given supply curve,a decrease in demand leads to

Refer to the figure below: In the figure,the equilibrium price and quantity are

Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to

A "puppy boom" and an increase in the price of horse meat would cause the market price of dog food to

Refer to the figure below: Let supply remain constant at S; an increase in the price of a substitute good causes consumers to be willing and able to buy 150 more units of the good at each price in the list than they were when demand was D.Which of the following statements is (are) true?

Refer to the figure below: Let supply remain constant at S; a decrease in income causes consumers to be willing and able to purchase 150 fewer units at each price than they were previously.

Use the following demand and supply functions: Demand: Qd=900−60pQ _ { d } = 900 - 60 pQd​=900−60p Supply: Qs=−200+50PQ _ { s } = - 200 + 50 \mathrm { P }Qs​=−200+50P Equilibrium price and output are

Refer to the figure below: Let demand remain constant at D; an increase in wages causes firms to be willing and able to sell 150 fewer units at each price than they were before the wage increase.

So long as the actual market price exceeds the equilibrium market price,there will be

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ If the price is currently $11,there is a

Use the following demand and supply functions: Demand: $Q _ { d } = 900 - 60 p$ Supply: $Q _ { s } = - 200 + 50 \mathrm { P }$ Equilibrium price and output are