Question 1

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

Accepted Answer

When the demand curve shifts rightward, it means that there is an increase in demand for the good. As a result, the equilibrium price increases. This increase in the price incentivizes suppliers to produce and sell more of the good, leading to an increase in quantity supplied. However, the supply curve does not shift in this case as the increase in quantity supplied is simply a movement along the existing supply curve.

Question 2

For the following, please answer "True" or "False" and explain why.
-The quantity of a good that consumers demand depends only on the price of the good.

Accepted Answer

The quantity of a good demanded depends on many factors including: price,consumers' incomes,and the price of related goods.

Question 3

For the following, please answer "True" or "False" and explain why.
-During the winter of 1997-1998,the northeastern United States experienced warmer than usual conditions.The price of home heating oil was less than it was during the previous winter,but people bought less home heating oil.This contradicts the Law of Demand.

Accepted Answer

The statement claiming a contradiction confuses a change in quantity demanded with a change in the demand curve.The law of demand refers to movements along a given demand curve.The mild weather caused a leftward shift of the demand curve.

Question 4

Suppose the demand for widgets is given by QD = 100 - 5p - pd + 2I,where I is average consumer income,p is the price of lemons,and pd is the price of doodads.According to this equation,doodads are a(n)________ for widgets.

Accepted Answer

The negative coefficient of pd in the demand equation indicates that as the price of doodads (pd) increases, the demand for widgets (QD) decreases, suggesting that doodads are substitutes for widgets.

Question 5

For the following, please answer "True" or "False" and explain why.
-Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

Accepted Answer

Demand curves slope downward assuming all other factors do not change.Consumers may view brand-name drugs to be of higher quality than store-brand drugs,and therefore the demand curve for brand-name drugs lies to the right of the demand curve for store-brand drugs.

Question 6

For the following, please answer "True" or "False" and explain why.
-When the price of beef rises,consumers switch consumption to substitutes such as chicken and fish,thereby decreasing the demand for beef.

Accepted Answer

The statement confuses a change in quantity demanded with a shift in demand.When the price rises,consumers find substitute goods to consume,which reduces the quantity demanded,not the demand curve.

Question 7

Suppose the demand for a particular product can be expressed as Q = 100/p.Calculate the total amount spent on this good when p = 10,20,and 50.Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

Accepted Answer

The answer of Suppose the demand for a particular product...

Question 8

The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG,where QD is the quantity of widgets demanded,y is the per capital income and pG is the price of Gizmos.Compute the partial derivatives with respect to y and pG.

Accepted Answer

The answer of The demand curve for Widgets is given...

Question 9

Suppose N consumers each have an identical demand curve for a good is given by Q = a - bp,where Q is the quantity demanded,p is the price,and a and b are positive constants.What is the market demand curve? Is the slope (in price)of the market demand greater or less than the slope of each individual demand curve?

Accepted Answer

The answer of Suppose N consumers each have an identical...

Question 10

Suppose there are 100 identical firms in the rag industry,and each firm is willing to supply 10 rags at any price.The market supply curve will be a(n)

Accepted Answer

Since each of the 100 firms supplies 10 rags, the total market supply is 100 firms * 10 rags/firm = 1000 rags. A vertical supply curve would imply that the quantity supplied does not change with price, which is not the case here. The correct interpretation is that the total quantity supplied to the market is fixed at 1000 rags, regardless of price, indicating a misunderstanding in the explanation. The correct depiction of a market where suppliers are willing to supply a fixed quantity regardless of price would actually be a horizontal line, reflecting that the quantity supplied remains constant across different prices. However, the scenario described suggests that the total quantity supplied to the market by all firms combined is 1000 rags, but it does not specify how this quantity changes with price, leading to a misinterpretation in the initial explanation. The correct answer, based on the information given, should indicate that the total supply is 1000 rags, but the nature of the supply curve (whether it's vertical or horizontal) in this context was misinterpreted. The supply curve in such a context, where each firm is willing to supply a certain quantity at any price, would typically be represented as horizontal, indicating that the quantity supplied is fixed and does not change with price, which contradicts the explanation provided.

Question 11

Supply curves

Accepted Answer

Supply curves can have many shapes depending on the market conditions and the behavior of producers. They can be upward sloping, downward sloping, or flat. For example, if the cost of production increases as more output is produced, the supply curve may be upward sloping. However, if producers can take advantage of economies of scale or other cost-saving measures, the supply curve may be downward sloping. Additionally, in perfectly competitive markets, the supply curve is typically horizontal because producers are price-takers and must accept the market price for their goods.

Question 12

-The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,where Qd is the quantity demanded,P is the price,Pb is the price of burritos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).If there is a $1,000 increase in personal income,how will the Qd change?

Accepted Answer

The coefficient of Y in the demand equation is -10, indicating that for every 1 unit increase in Y (which is in thousands), Qd decreases by 10 units. Thus, a $1,000 increase in income (1 unit increase in Y) will decrease Qd by 10.

Question 13

Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Pb,where QD is the quantity of pizza demanded,P is the price of a pizza,and Pb is the price of a burrito.What is the slope of this demand function,and what information does the slope provide?

Accepted Answer

The answer of Suppose the market demand curve for pizza...

Question 14

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be supplied unless the price is above

Accepted Answer

The supply curve typically starts at a point above $0, indicating the minimum price at which suppliers are willing to produce and sell the product. In this case, if pizzas will not be supplied unless the price is above $5, it means the supply curve starts above $5, making option B correct.

Question 15

-The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,where Qd is the quantity demanded,P is the price,Pb is the price of burittos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).What is ∆Q/∆Ps?

Accepted Answer

The coefficient of Ps in the demand equation is -0.5, indicating that for every unit increase in the price of soft drinks, the quantity demanded for pizzas decreases by 0.5 units.

Question 16

Suppose an individual inverse demand curve is given as P = 2 - 1/2 qᶦ,where qᶦ is the quantity demanded by individual i.There are 50 individual consumers with this identical,individual inverse demand curve.Solve for the market demand curve.

Accepted Answer

The answer of Suppose an individual inverse demand curve is...

Question 17

Show that the slope of the market demand curve is the summation of the slopes of individuals' demand curves.

Accepted Answer

The answer of Show that the slope of the market...

Question 18

For the following, please answer "True" or "False" and explain why.
-If a good is not produced,then there is no demand for it.

Accepted Answer

The demand for a product is independent of its supply.It is possible that people want to buy some of the product,but at prices that are below what sellers would require to begin production.

Question 19

-The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,where Qd is the quantity demanded,P is the price,Pb is the price of buritos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).We can conclude that burritos and pizzas are

Accepted Answer

The positive coefficient of Pb (5) in the demand equation indicates that as the price of burritos increases, the demand for pizzas also increases, suggesting that burritos and pizzas are substitutes.

Question 20

A rise in the oil price will

Accepted Answer

An increase in the price of oil, which is a key input in the production of gasoline, will increase the cost of production for gas producers. This will lead to a decrease in the quantity of gas supplied at any given price, and therefore a leftward shift of the supply curve of gas.

Quiz 2: Supply and Demand

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

For the following, please answer "True" or "False" and explain why. -The quantity of a good that consumers demand depends only on the price of the good.

Suppose the demand for widgets is given by QD = 100 - 5p - pd + 2I,where I is average consumer income,p is the price of lemons,and pd is the price of doodads.According to this equation,doodads are a(n) ________ for widgets.

For the following, please answer "True" or "False" and explain why. -Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

For the following, please answer "True" or "False" and explain why. -When the price of beef rises,consumers switch consumption to substitutes such as chicken and fish,thereby decreasing the demand for beef.