Question 1

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What is the equilibrium price?

Accepted Answer

The equilibrium price is found where Qs = Qd. Substituting the inverse supply and demand equations into each other, we get:0.5Qs + 1 = -2Qd + 150.5Qs = -2Qd + 14Qs = -4Qd + 28Setting Qs = Qd, we get:-4Qd + 28 = Qd5Qd = 28Qd = 5.6Substituting Qd = 5.6 into either the inverse supply or demand equation, we get:P = 0.5(5.6) + 1 = $3.80Therefore, the equilibrium price is $3.80.

Question 2

Which of the following is a key assumption of the supply and demand model?

Accepted Answer

The supply and demand model assumes that the price and quantity sold of a good or service are determined in a single market, focusing on the interactions between buyers and sellers in that specific market to establish equilibrium prices and quantities.

Question 3

(Figure: Price Elasticity of Demand) What is the price elasticity of demand at point A and point B?

Accepted Answer

The answer of (Figure: Price Elasticity of Demand) What is...

Question 4

To test whether the law of demand holds using calculus, you should:

Accepted Answer

The law of demand states that there is an inverse relationship between price and quantity demanded, meaning as price increases, quantity demanded decreases, and vice versa. Therefore, the correct approach is to take the partial derivative of quantity demanded with respect to price (P), and the law of demand holds if this derivative is negative, indicating that quantity demanded decreases as price increases.

Question 5

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is the equilibrium price?

Accepted Answer

To find the equilibrium price, set Q^D equal to Q^S: 1,000/P = 10P. Solving for P gives P = $10.

Question 6

A decrease in both demand and supply will cause a(n) _____ equilibrium price and a(n) _____ equilibrium quantity.

Accepted Answer

When both demand and supply decrease, the effect on equilibrium price is uncertain because it depends on the magnitude of the shifts in demand and supply. However, the equilibrium quantity will definitely decrease because both curves are shifting in directions that lead to lower quantities being exchanged.

Question 7

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

Accepted Answer

When the supply of oil is perfectly elastic, it means that suppliers are willing to supply any quantity at a given price. Therefore, if demand increases (e.g., due to more people moving to Pittsburgh), the quantity supplied can increase to meet this demand without changing the price. Thus, the equilibrium quantity increases, but the equilibrium price remains unchanged.

Question 8

(Figure: Market for Asparagus I) An increase in quantity supplied could be indicated by:

Accepted Answer

The answer of (Figure: Market for Asparagus I) An increase...

Question 9

(Figure: Demand Shifts II) Using the figure, which factor could cause a movement from point A to point B?

Accepted Answer

The answer of (Figure: Demand Shifts II) Using the figure,...

Question 10

(Figure: Market for Rubber Balls) Suppose the price of raw materials falls, leading suppliers to offer ten additional units at every price. What is the equation for the new normal supply curve?

Accepted Answer

The answer of (Figure: Market for Rubber Balls) Suppose the...

Question 11

(Figure: Price Elasticity of Supply) The price elasticity of supply at $8 is:

Accepted Answer

The answer of (Figure: Price Elasticity of Supply) The price...

Question 12

In the blackberry market, the quantity demanded is given by Q^D = 2,600 - 500P, and the quantity supplied is given by Q^S = -400 + 100P. What are the equilibrium price and equilibrium quantity?

Accepted Answer

The answer of In the blackberry market, the quantity demanded...

Question 13

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to income is negative,:

Accepted Answer

If the partial derivative of quantity demanded of sunflowers with respect to income is negative, it means that as income increases, the demand for sunflowers decreases. This characteristic is indicative of an inferior good, thus making sunflowers an inferior good.

Question 14

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

Accepted Answer

If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, it means that as the price of broccoli increases, the demand for cauliflower also increases. This behavior indicates that cauliflower and broccoli are substitutes, as consumers switch to cauliflower when broccoli becomes more expensive.

Question 15

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D₁ is described by this equation:

Accepted Answer

The answer of (Figure: Price and Quantity of Turkeys I)...

Question 16

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. What is the equilibrium price?

Accepted Answer

To find the equilibrium price, set the demand equation equal to the supply equation and solve for P: 100 - 4P = -20 + 2P. Combining like terms gives 6P = 120, so P = 20.

Question 17

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium price?

Accepted Answer

To find the new equilibrium price after the increase in demand by 60 bottles at any given price, we adjust the demand equation to reflect this increase. The original demand equation is $Q_d = 100 - 4P$. With an increase in demand by 60 bottles, the new demand equation becomes $Q_d = 160 - 4P$. The supply equation remains unchanged at $Q_s = -20 + 2P$.To find the equilibrium, we set $Q_d = Q_s$:$$160 - 4P = -20 + 2P$$Solving for $P$, we get:$$180 = 6P$$$$P = 30$$However, this calculation mistake led to the wrong conclusion. Correctly solving the equation should give us the right answer. Let's correct the calculation:$$160 - 4P = -20 + 2P$$$$180 = 6P$$$$P = 30$$The mistake in my explanation was acknowledging an error that wasn't there and incorrectly suggesting a recalculation. The correct calculation indeed leads to $P = 30$, which matches one of the provided options. However, the initial instruction was to solve for the new equilibrium price with the correct setup, which was done, but my explanation mistakenly introduced a doubt that was not necessary. The correct equilibrium price, based on the correctly solved equations, should have been confidently stated as per the options given.

Question 18

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Accepted Answer

The answer of Suppose that the extended market demand curve...

Question 19

Suppose that the demand curve for a new product can be expressed as Q^D = 900 - 3P. At what quantity is total expenditure maximized?

Accepted Answer

Total expenditure (TE) is maximized where the price elasticity of demand is unitary (elasticity = 1). The demand curve is given by Q = 900 - 3P. To find the quantity where TE is maximized, we first need to find the price that makes the elasticity equal to 1. The midpoint formula for elasticity is (P/Q) * (dQ/dP), where dQ/dP is the derivative of the demand function with respect to P, which is -3 in this case. Setting the elasticity to 1 and solving for Q gives us Q = 450.

Question 20

The demand curve for a product is Q = 50 - 0.5P. What is the price elasticity of demand at a price of $60?

Accepted Answer

The price elasticity of demand (PED) formula is PED = (% change in quantity demanded) / (% change in price). To find the PED at P = $60, first calculate the quantity demanded (Q) using the demand equation Q = 50 - 0.5P. Substituting P = 60 gives Q = 50 - 0.5(60) = 50 - 30 = 20. To find the PED, we need the derivative of Q with respect to P, which is -0.5. The PED formula can also be expressed as (dQ/dP) * (P/Q). Substituting the values gives (-0.5) * (60/20) = -1.5.

Quiz 2: Supply and Demand

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What is the equilibrium price?

Which of the following is a key assumption of the supply and demand model?

(Figure: Price Elasticity of Demand) What is the price elasticity of demand at point A and point B?

To test whether the law of demand holds using calculus, you should:

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is the equilibrium price?

A decrease in both demand and supply will cause a(n) _ equilibrium price and a(n) _ equilibrium quantity.

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

(Figure: Market for Asparagus I) An increase in quantity supplied could be indicated by:

(Figure: Demand Shifts II) Using the figure, which factor could cause a movement from point A to point B?

(Figure: Market for Rubber Balls) Suppose the price of raw materials falls, leading suppliers to offer ten additional units at every price. What is the equation for the new normal supply curve?

(Figure: Price Elasticity of Supply) The price elasticity of supply at $8 is:

In the blackberry market, the quantity demanded is given by Q^D = 2,600 - 500P, and the quantity supplied is given by Q^S = -400 + 100P. What are the equilibrium price and equilibrium quantity?

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to income is negative,:

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D₁ is described by this equation:

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. What is the equilibrium price?

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium price?

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Suppose that the demand curve for a new product can be expressed as Q^D = 900 - 3P. At what quantity is total expenditure maximized?

The demand curve for a product is Q = 50 - 0.5P. What is the price elasticity of demand at a price of $60?

Quiz 2: Supply and Demand

The inverse supply equation for clay pots is P = 0.5Q S + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. What is the equilibrium price?

Which of the following is a key assumption of the supply and demand model?

(Figure: Price Elasticity of Demand) What is the price elasticity of demand at point A and point B?

To test whether the law of demand holds using calculus, you should:

Suppose that the demand and supply curves for a good are given by QD = 1,000/P and QS = 10P. What is the equilibrium price?

A decrease in both demand and supply will cause a(n) _____ equilibrium price and a(n) _____ equilibrium quantity.

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

(Figure: Market for Asparagus I) An increase in quantity supplied could be indicated by:

(Figure: Demand Shifts II) Using the figure, which factor could cause a movement from point A to point B?

(Figure: Market for Rubber Balls) Suppose the price of raw materials falls, leading suppliers to offer ten additional units at every price. What is the equation for the new normal supply curve?

(Figure: Price Elasticity of Supply) The price elasticity of supply at $8 is:

In the blackberry market, the quantity demanded is given by QD = 2,600 - 500P, and the quantity supplied is given by QS = -400 + 100P. What are the equilibrium price and equilibrium quantity?

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to income is negative,:

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D1 is described by this equation:

The market for cod liver oil pills is characterized by the demand and supply equations: QD = 100 - 4P and QS = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. What is the equilibrium price?

The market for cod liver oil pills is characterized by the demand and supply equations: QD = 100 - 4P and QS = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium price?

Suppose that the extended market demand curve for maple syrup can be expressed as , where Pp is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Suppose that the demand curve for a new product can be expressed as QD = 900 - 3P. At what quantity is total expenditure maximized?

The demand curve for a product is Q = 50 - 0.5P. What is the price elasticity of demand at a price of $60?

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What is the equilibrium price?

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is the equilibrium price?

A decrease in both demand and supply will cause a(n) _ equilibrium price and a(n) _ equilibrium quantity.

In the blackberry market, the quantity demanded is given by Q^D = 2,600 - 500P, and the quantity supplied is given by Q^S = -400 + 100P. What are the equilibrium price and equilibrium quantity?

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D₁ is described by this equation:

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. What is the equilibrium price?

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium price?

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Suppose that the demand curve for a new product can be expressed as Q^D = 900 - 3P. At what quantity is total expenditure maximized?