Question 1

-A market research team has come up with the demand and supply schedules for pizza in Cheeseboro. These sch are given in the table above. Use these data to analyze the situation in the market for pizza.
a) Draw a figure showing the demand curve for pizza and the supply curve of pizza. What are the equilibrium and quantity?
b) Suppose the price is $10. Describe the situation in the market and explain how the price of pizza adjusts. No suppose the price is $6. Describe the situation in the market and explain how the price of pizza adjusts.
c) The market research report also includes a prediction about the effect on the market for pizza in Cheeseboro recent news published in Cheeseboro Herald. The Herald reported that pizza has been discovered to help preve diseases. Unfortunately, your dog chewed up the report and all you can read about the prediction is "quantity... by 150 at each price." What does the prediction say? Use your graph to show the predicted effects on the market for pizza. What are the predicted equilibrium price and quantity? How will the market adjust?

Accepted Answer

The answer of 
-A market research team has come up...

Question 2

An increase in price results in increase in supply but not an increase in the quantity supplied.

Accepted Answer

An increase in price results in an increase in the quantity supplied, which is movement along the supply curve. An increase in supply, on the other hand, means a shift in the supply curve.

Question 3

-A market research team has come up with the demand and supply schedules for gasoline in Motorville in the tab above. Use these data to analyze the situation in the market for gas in Motorville.
a) Draw a figure showing the demand curve for gasoline and the supply curve of gasoline. What are the equili price and quantity?
b) Suppose the price is $1.30. Describe the situation in the market and explain how the market adjusts. Now su the price is $1.00. Describe the situation in the market and explain how the market adjusts.
c) The market research report also predicts that a rise in the price of crude oil will decrease the quantity of gas by 20,000 gallons a week at each price. Suppose the price of crude oil does rise. Use your figure to show how this affect the market for gas. How will the market adjust? What will be the new equilibrium price and quantity?

Accepted Answer

The answer of 
-A market research team has come up...

Question 4

For consumers, chocolate chip cookies and doughnuts are substitutes. So, an increase in the price of chocolate chip cookies will lead to a rightward shift in the demand curve for doughnuts.

Accepted Answer

When the price of chocolate chip cookies increases, consumers may switch to buying doughnuts as a substitute. Therefore, the demand for doughnuts will increase, leading to a rightward shift in the demand curve.

Question 5

In the market for chocolate chip cookies, if the demand decreases while the supply increases, the price definitely falls but the quantity might increase, decrease, or remain the same.

Accepted Answer

This is because if demand decreases, sellers will have excess inventory and may lower the price to entice buyers. However, it is not certain whether the quantity sold will increase, decrease, or remain the same as it also depends on other factors such as the elasticity of demand and the extent of the increase in supply.

Question 6

An increase in technology will shift the good's supply curve rightward.

Accepted Answer

An increase in technology allows for more efficient production and lowers the cost of production, which allows producers to supply more of the good at every price level. This shift is represented by a rightward shift of the supply curve.

Question 7

Young drivers often buy used cars. An increase in the legal driving age to twenty- one shifts the demand curve for used cars leftward, whereas lowering the age to fifteen shifts the demand curve rightward.

Accepted Answer

When the legal driving age increases to twenty-one, young drivers will be unable to drive until they reach that age, resulting in a decrease in demand for used cars. Conversely, lowering the age to fifteen would increase the number of potential young drivers, resulting in an increase in the demand for used cars.

Question 8

During the mid- 2000s, the average price of a used car fell by nearly $500 and the quantity sold nation- wide decreased by several thousands each year. This set of results is a contradiction of the law of demand.

Accepted Answer

This set of results is not a contradiction of the law of demand. According to the law of demand, as the price of a good decreases, the quantity demanded should increase, and vice versa. However, in this case, the decrease in quantity demanded can be attributed to other factors such as a shift in consumer preferences, changes in market conditions, or a decrease in the availability of used cars. Therefore, it does not necessarily contradict the law of demand.

Question 9

An increase in the incomes of baseball fans in New York leads to a rightward movement along the demand curve but does not shift the demand curve for Yankees tickets.

Accepted Answer

An increase in the incomes of baseball fans in New York would likely shift the demand curve for Yankees tickets to the right, not just cause a movement along the demand curve, because it affects the willingness and ability of consumers to buy at all prices, assuming Yankees tickets are a normal good.

Question 10

If house purchases and renting an apartment are substitutes, then an increase in the price of a new house results in a rise in the rent charged for apartments.

Accepted Answer

If the price of buying a new house increases, some people may decide to rent an apartment instead of buying, increasing the demand for apartments and causing the rent to increase as well. This shows that house purchases and renting an apartment are substitutes, and a change in the price of one will affect the demand for the other.

Question 11

The supply curve indicates the minimum quantity that a producer would be willing to supply at alternative prices.

Accepted Answer

The supply curve indicates the quantity that a producer is willing and able to supply at each price level, not just the minimum quantity.

Question 12

Young drivers often buy used cars. An increase in the legal driving age to twenty- one would result in a leftward movement along the demand curve for used cars, whereas lowering the age to fifteen would result in a rightward movement along the demand curve.

Accepted Answer

The answer of Young drivers often buy used cars. An...

Question 13

A demand curve is also a willingness- and- ability- to- pay curve.

Accepted Answer

The demand curve represents the various quantities of a good or service that consumers are willing and able to purchase at different prices. This reflects their willingness to pay for the good or service at each price level. Therefore, the demand curve is also referred to as a willingness-and-ability-to-pay curve.

Question 14

Using supply- and- demand diagrams, show and explain the effects of the following events on the price of
CD- Rs and the quantity of CD- Rs sold. For each event, identify which of the determinants of demand or supply affected, how it influences demand or supply, and what happens to the equilibrium price and quantity.
a) The price of a CD burner falls.
b) Workers who make CD- Rs get a pay raise.
c) Producers introduce new cost- saving technologies in their CD- R production plants.
d) Consumers' incomes increase and CD- Rs are a normal good.
e) Free peer- to- peer music exchange through the Internet becomes legal.

Accepted Answer

The answer of Using supply- and- demand diagrams, show and...

Question 15

When both the demand for a good increases and the supply of the good increases, the equilibrium quantity definitely increases.

Accepted Answer

When both demand and supply increase, the equilibrium quantity will definitely increase. This is because the increase in demand signals to suppliers that there is a higher quantity of the good that consumers are willing to buy at a given price, which incentivizes suppliers to increase production. The increase in supply then results in a lower equilibrium price and a higher equilibrium quantity, satisfying the increased demand while also promoting competition among suppliers.

Question 16

A movement along the demand curve shows a change in demand.

Accepted Answer

A movement along the demand curve shows a change in quantity demanded, not a change in demand. A change in demand would shift the entire demand curve to the left or right.

Question 17

An increase in the hourly wage of hot dog vendors at Yankee Stadium shifts the supply curve of hot dogs at Yankee Stadium leftward.

Accepted Answer

An increase in the hourly wage of hot dog vendors raises the cost of production, leading to a decrease in supply, which shifts the supply curve leftward.

Question 18

A supply curve is also a maximum- supply- price curve.

Accepted Answer

The answer of A supply curve is also a maximum-...

Quiz 3: Demand and Supply