Question 1

$$\begin{array} { | c | r | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ If government set a minimum price of $50 in the market, a

Accepted Answer

At a price of $50, the quantity demanded is 52 units and the quantity supplied is 73 units, resulting in a surplus of 21 units (73 - 52 = 21).

Question 2

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium price for X is

Accepted Answer

To find the equilibrium price, we need to set the demand equation equal to the supply equation:
10 - 0.2Q = 2 + 0.2Q
Solving for Q, we get:
0.4Q = 8
Q = 20
Now, we can plug this value of Q into either the demand or supply equation to find the equilibrium price:
P = 10 - 0.2(20) = $6

Question 3

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

Accepted Answer

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

100 - 2Q = 10 + 4Q

Simplifying, we get:

90 = 6Q

Q = 15

To find the equilibrium price, we plug Q back into either the demand or supply equation:

P = 100 - 2(15) = 70

Therefore, the equilibrium price is $70.

Question 4

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new
Equilibrium quantity is

Accepted Answer

To find the equilibrium quantity, set the new demand equation equal to the supply equation: 7 - 0.3Q = 2 + 0.2Q. Solving for Q gives Q = 10.

Question 5

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased. Based on this we can conclude that

Accepted Answer

The equilibrium quantity increasing indicates that demand has increased or supply has increased, or possibly both. However, since the equilibrium price has fallen, it must be the case that supply has increased more than demand has increased, leading to a surplus of computer memory and a lower price for it. Therefore, D is the correct answer as it suggests that increases in supply have exceeded increases in demand.

Question 6

With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will

Accepted Answer

When there is a decrease in resource prices, the cost of producing the product decreases for the suppliers, leading to an increase in supply. This will cause the supply curve to shift to the right. As a result, the equilibrium price will decrease and equilibrium quantity will increase because the increase in supply will lower the price while increasing the quantity demanded.

Question 7

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium quantity is

Accepted Answer

To find the equilibrium quantity, we need to set the demand equal to the supply.

100 - 2Q = 10 + 4Q

Simplifying, we get:

90 = 6Q

Q = 15

Therefore, the equilibrium quantity is 15.

Question 8

Refer to the diagram. An effective government-set price ﬂoor is best illustrated by

Accepted Answer

Price C represents an effective government-set price floor because it is above the equilibrium price and creates a surplus of supply. This surplus indicates that producers are willing to supply more than consumers demand at the restricted price, and the government will buy the excess supply to maintain the price floor.

Question 9

$$\begin{array} { | c | r | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ If government set a maximum price of $45 in the market,

Accepted Answer

At a price of $45, the quantity demanded is 62 units and the quantity supplied is also 62 units, indicating neither a shortage nor a surplus.

Question 10

$$\begin{array} { | c | r | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ In this market, economists would call a government-set maximum price of $40 a

Accepted Answer

A government-set maximum price is called a price ceiling, which is the highest price that can be legally charged for a good or service. Therefore, option A is the best choice.

Question 11

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changed from P = 100 - 2Q to P = 130 - Q, the new
Equilibrium price is

Accepted Answer

To find the equilibrium price, set the new demand equation equal to the supply equation: 130 - Q = 10 + 4Q. Solving for Q gives Q = 24. Substitute Q = 24 into either equation to find the equilibrium price: P = 10 + 4(24) = 106.

Question 12

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changes from P = 100 - 2Q to P = 130 - Q, the new
Equilibrium quantity is

Accepted Answer

To find the new equilibrium quantity, we need to set the new demand equation equal to the supply equation:

130 - Q = 10 + 4Q

Solving for Q, we get:

5Q = 120

Q = 24

To confirm this, we can substitute Q = 24 into either the demand or supply equation:

P = 100 - 2Q

P = 100 - 2(24)

P = 52

or

P = 10 + 4Q

P = 10 + 4(24)

P = 106

Since the new equilibrium price is between these two values (52 and 106), we can assume that Q = 24 is the correct answer.

Question 13

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, we can
Conclude that

Accepted Answer

The change in the demand equation from P = 10 - 0.2Q to P = 7 - 0.3Q indicates a decrease in demand. This is because the coefficient of Q has become more negative, indicating that for any given price, quantity demanded will be lower than before. The supply equation remains unchanged, so we cannot infer any change in supply from this information.

Question 14

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

Accepted Answer

To find the equilibrium quantity, set the demand equation equal to the supply equation: 10 - 0.2Q = 2 + 0.2Q. Solving for Q gives Q = 20.

Question 15

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will

Accepted Answer

When there is a downsloping demand curve and an upsloping supply curve, the imposition of an excise tax will lead to an increase in the price paid by consumers and a decrease in the price received by producers. This reduction in supply will lead to a decrease in equilibrium quantity. Therefore, the correct answer is D, which states that placing an excise tax on this product will increase equilibrium price and decrease equilibrium quantity.

Question 16

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that

Accepted Answer

When production costs fall, supply shifts to the right, resulting in a lower equilibrium price and higher equilibrium quantity. However, since both price and quantity have increased, demand must have grown faster than supply.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \
\hline 52 & \$ 50 & 73 \
\hline 62 & 45 & 62 \
\hline 72 & 40 & 51 \
\hline 82 & 35 & 42 \
\hline 92 & 30 & 33 \
\hline
\end{array}$$ In this market, economists would call a government-set minimum price of $50 a

Accepted Answer

A minimum price set by the government is a price floor.

Question 18

Refer to the diagram. An effective government-set price ceiling is best illustrated by

Accepted Answer

The answer of  Refer to the diagram. An effective...

Question 19

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

Accepted Answer

An increase in the price of a substitute good makes the original product more attractive to buyers, leading to an increase in demand. This shifts the demand curve to the right, resulting in a higher equilibrium price and quantity.

Question 20

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new
Equilibrium price is

Accepted Answer

To find the new equilibrium price, set the new demand equation 7 - 0.3Q equal to the supply equation 2 + 0.2Q. Solving 7 - 0.3Q = 2 + 0.2Q gives Q = 10. Substitute Q = 10 into either equation to find P = 4.

Quiz 3: Demand, Supply, and Market Equilibrium

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium price for X is

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium quantity is

Over time, the equilibrium price of a gigabyte of computer memory has fallen, while the equilibrium quantity purchased has increased. Based on this we can conclude that

With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium quantity is

Refer to the diagram. An effective government-set price ﬂoor is best illustrated by

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changed from P = 100 - 2Q to P = 130 - Q, the new Equilibrium price is

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. If demand changes from P = 100 - 2Q to P = 130 - Q, the new Equilibrium quantity is

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, we can Conclude that

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that

Refer to the diagram. An effective government-set price ceiling is best illustrated by

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. If demand changes from P = 10 - 0.2Q to P = 7 - 0.3Q, the new Equilibrium price is