Question 1

When supply decreases, demand constant, equilibrium price _____________ and equilibrium quantity _______________.

Accepted Answer

The answer of When supply decreases, demand constant, equilibrium price...

Question 2

When demand increases, supply constant, equilibrium price _____________ and equilibrium quantity _______________.

Accepted Answer

The answer of When demand increases, supply constant, equilibrium price...

Question 3

The general demand function for good A is $Q _ { d } = 1,200 - 6 P + 0.5 M - 10 P _ { B } + 4 \Im + 2 P _ { e } + 3 N$ where $Q _ { d }$ = quantity demanded of good A per month, P = the price of good A, M = average household income, $P _ { B }$ = price of related good B, $\Im$ = a consumer taste index, P_e = price consumers expect to pay next month for good A, and N = number of buyers in market for good. a. Good A is a(n) ___________ good because the slope parameter on __________ is _________. b. Goods A and B are ________________ because the slope parameter on ________ is _____________. c. When P = $6, M = $40,000, $P _ { B }$ = $20, $\Im$ = 8, P_e = $2, and N = 10,000, quantity demanded of good A is ____________ units per month.

Accepted Answer

The answer of The general demand function for good A...

Question 4

When price is higher than the equilibrium price, quantity supplied is _______________ than quantity demanded, and excess _____________ exists.

Accepted Answer

The answer of When price is higher than the equilibrium...

Question 5

Suppose the demand and supply curves for good X are both linear. And, the demand price for the first unit of X is $28, and the supply price for the first unit of X is $6. If the equilibrium price for good X is $16 and the equilibrium quantity of X is 24,000 units, then total consumer surplus is $________, total producer surplus is $_________, and total social surplus is $_____________.

Accepted Answer

Consumer surplus is calculated as the area of the triangle above the equilibrium price and below the demand curve: (1/2) * (28 - 16) * 24,000 = $144,000. Producer surplus is the area of the triangle below the equilibrium price and above the supply curve: (1/2) * (16 - 6) * 24,000 = $120,000. Total social surplus is the sum of consumer and producer surplus: $144,000 + $120,000 = $264,000.

Question 6

The general supply function is $Q _ { s } = 40 + 4 P - 8 P _ { I } + 6 F$ , where $Q _ { d }$ = quantity supplied per month, P = the price of the commodity, $P _ { I }$ = price of an input, and F = number of sellers. 
a. The supply function when $P _ { I }$ = $90 and F = 20 is ____________________. The supply function intersects the price axis at a price of $______. 
b. Using the supply function in part a, the quantity supplied when the price of the commodity is $300 is ________ units per month. When the price is $400, the quantity supplied is _______ units per month.
c. The INVERSE supply equation (for part a) is ____________________. The supply price for 750 units per month is $_______.

Accepted Answer

The answer of The general supply function is \(Q _...

Question 7

If demand decreases while supply simultaneously decreases, equilibrium price __________ (rises, falls, may either rise or fall) and equilibrium quantity ________________(rises, falls, may either rise or fall).

Accepted Answer

The answer of If demand decreases while supply simultaneously decreases,...

Question 8

In the general demand function, if goods X and R are substitutes, the sign on the slope parameter of the ______________ good is ______________ (positive, negative, zero).

Accepted Answer

The answer of In the general demand function, if goods...

Question 9

Suppose there are only three consumers in the market for a good and each consumer will buy only one unit of the good. Their individual economic values for the good are $6, $8, and $12, respectively. If the market price for the good is $10, what is the total consumer surplus for the three buyers?

Accepted Answer

The answer of Suppose there are only three consumers in...

Question 10

When government imposes a ceiling price below the equilibrium price, a ___________ results. When government sets a floor price above the equilibrium price, a __________ results.

Accepted Answer

The answer of When government imposes a ceiling price below...

Question 11

If the market price of a good is $150 and the supply price of the good is $70, what is the producer surplus if any?

Accepted Answer

Producer surplus is the difference between the market price and the supply price of a good. Here, the market price is $150 and the supply price is $70. Therefore, the producer surplus is $80 ($150 - $70 = $80).

Question 12

Suppose an individual buyer values a pound of butter at $10. If the market price of butter is $8, what is the consumer surplus for this buyer?

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Here, the consumer is willing to pay $10 but pays $8, so the consumer surplus is $10 - $8 = $2.

Question 13

If demand increases while supply simultaneously decreases, equilibrium price _____________ (rises, falls, may either rise or fall) and equilibrium quantity ________________(rises, falls, may either rise or fall).

Accepted Answer

The answer of If demand increases while supply simultaneously decreases,...

Question 14

The demand function slopes ______________ because of the law of _____________ which states that, other things equal, price and quantity demanded are ______________ related.

Accepted Answer

The answer of The demand function slopes ______________ because of...

Question 15

When price is lower than the equilibrium price, quantity supplied is ____________ than quantity demanded, and excess ____________ exists.

Accepted Answer

The answer of When price is lower than the equilibrium...

Question 16

In the general supply function, the sign of the slope parameter on the price of an input is ______________ (positive, negative, zero) because a DECREASE in the price of an input will cause the amount supplied to __________________ (increase, decrease) at each price of the good. As a consequence, the supply curve shifts _______________ (leftward, rightward), and supply is said to _______________ (increase, decrease).

Accepted Answer

The answer of In the general supply function, the sign...

Question 17

If income increases, the demand for a(n) ______________ good will decrease.

Accepted Answer

The answer of If income increases, the demand for a(n)...

Question 18

In the general demand function, when a good is a normal good, the sign on the slope parameter of ____________ is _____________ (positive, negative, zero).

Accepted Answer

The answer of In the general demand function, when a...

Question 19

In the general supply function, the sign of the slope parameter on the price of goods related in production is _____________ (positive, negative, zero) when the goods are complements in production because a DECREASE in the price of a complementary good in production causes the amount supplied to _________________ (increase, decrease) at each price of the good. As a consequence, the supply curve shifts _______________ (leftward, rightward), and supply is said to _______________ (increase, decrease).

Accepted Answer

The answer of In the general supply function, the sign...

Question 20

An increase in the number of firms or productive capacity in an industry causes supply to _______________ (increase, decrease).

Accepted Answer

The answer of An increase in the number of firms...

Quiz 2: Demand, Supply, and Market Equilibrium

When supply decreases, demand constant, equilibrium price _ and equilibrium quantity ___.

When demand increases, supply constant, equilibrium price _ and equilibrium quantity ___.

When price is higher than the equilibrium price, quantity supplied is ___ than quantity demanded, and excess _ exists.

If demand decreases while supply simultaneously decreases, equilibrium price (rises, falls, may either rise or fall) and equilibrium quantity ______(rises, falls, may either rise or fall).

In the general demand function, if goods X and R are substitutes, the sign on the slope parameter of the good is (positive, negative, zero).

Suppose there are only three consumers in the market for a good and each consumer will buy only one unit of the good. Their individual economic values for the good are $6, $8, and $12, respectively. If the market price for the good is $10, what is the total consumer surplus for the three buyers?

When government imposes a ceiling price below the equilibrium price, a _ results. When government sets a floor price above the equilibrium price, a results.

If the market price of a good is $150 and the supply price of the good is $70, what is the producer surplus if any?

Suppose an individual buyer values a pound of butter at $10. If the market price of butter is $8, what is the consumer surplus for this buyer?

If demand increases while supply simultaneously decreases, equilibrium price _ (rises, falls, may either rise or fall) and equilibrium quantity ____(rises, falls, may either rise or fall).

The demand function slopes ________ because of the law of _ which states that, other things equal, price and quantity demanded are ________ related.

When price is lower than the equilibrium price, quantity supplied is than quantity demanded, and excess exists.

If income increases, the demand for a(n) ______________ good will decrease.

In the general demand function, when a good is a normal good, the sign on the slope parameter of is _ (positive, negative, zero).

An increase in the number of firms or productive capacity in an industry causes supply to _______________ (increase, decrease).