Question 1

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Accepted Answer

The answer of If the demand for a product increases...

Question 2

You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 - 0.25Q
Supply: P = 130 + 0.10Q
Where P = Price and Q = Quantity.
A)Calculate the equilibrium price and quantity.
B)Calculate the consumer surplus in this market.
C)Calculate the producer surplus in this market.

Accepted Answer

The answer of You are given the following market data...

Question 3

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good.
a.The population increases and the price of inputs increase.
b.The price of a complement increases and technology advances.
c.The number of firms in the market increases and income increases.
d.Price is expected to increase in the future.
e.Consumer preference increases and the price of a substitute in production decreases.

Accepted Answer

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Question 4

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

Accepted Answer

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Question 5

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P then the corresponding price of fishing poles is represented by the equation
A)P = 0.6QD + 10.
B)P = 60 - QD.
C)P = -60 + QD.
D)P = QD + 60.

Accepted Answer

The given equation QD = 60 - P can be rearranged to solve for P: P = 60 - QD. Therefore, the corresponding price of fishing poles is represented by the equation P = 60 - QD.

Question 6

All else equal, an increase in the number of firms producing energy drinks will
A)shift the supply curve for energy drinks to the right.
B)shift the supply curve for energy drinks to the left.
C)shift the demand curve for energy drinks to the right.
D)shift the demand curve for energy drinks to the left.

Accepted Answer

The answer of All else equal, an increase in the...

Question 7

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

This is because as the number of firms decreases, the overall supply in the market decreases, leading to a shift to the left in the supply curve. With a decreased supply and constant demand, the equilibrium price will increase to reflect the shortage.

Question 8

Table 3.3
 $\begin{array}{|l|c|}
\hline \text { Demand } & \text { Supply } \
\hline P=80-Q D & P=50+1 / 2 Q S \
\hline Q D=80-P & Q S=2 P-100\
\hline
\end{array}$
-Refer to Table 3.3.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of producer surplus?
A)$100 thousand
B)$200 thousand
C)$600 thousand
D)$800 thousand

Accepted Answer

Producer surplus is the difference between the price producers receive for a good and the minimum price they are willing to accept. In this case, the equilibrium price is $60, and the supply curve is P = 50 + 1/2 Qs. The minimum price producers are willing to accept is the price at which they are willing to supply 0 units, which is $50. Therefore, producer surplus is:Producer surplus = (Equilibrium price - Minimum price) * QuantityProducer surplus = ($60 - $50) * 20,000 unitsProducer surplus = $100,000

Question 9

Table 3.3
 $\begin{array}{|l|c|}
\hline \text { Demand } & \text { Supply } \
\hline P=80-Q D & P=50+1 / 2 Q S \
\hline Q D=80-P & Q S=2 P-100\
\hline
\end{array}$
-Refer to Table 3.3.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?
A)$100 thousand
B)$200 thousand
C)$600 thousand
D)$800 thousand

Accepted Answer

The answer of Table 3.3
 \(\begin{array}{|l|c|}
\hline \text { Demand }...

Question 10

If the quantity of donuts supplied is represented by the equation QS = -15 + 5P then the corresponding price of donuts is represented by the equation
A)P = 0.2QS + 3.
B)P = 5QS + 75.
C)P = QS - 7.5.
D)P = 15 - 0.5QS.

Accepted Answer

The answer of If the quantity of donuts supplied is...

Question 11

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

The answer of If the number of firms producing mouthwash...

Question 12

If the price of hairspray is represented by equation P = 10 - 0.2 QD, then the corresponding quantity of hairspray demanded is represented by the equation
A)QD = 5P - 2.
B)QD = 0.5P + 2.
C)QD = 50 -5P.
D)QD = -10 + 0.2P.

Accepted Answer

The answer of If the price of hairspray is represented...

Question 13

Table 3.3
 $\begin{array}{|l|c|}
\hline \text { Demand } & \text { Supply } \
\hline P=80-Q D & P=50+1 / 2 Q S \
\hline Q D=80-P & Q S=2 P-100\
\hline
\end{array}$
-Refer to Table 3.3.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.What are the equilibrium price and quantity (in thousands)for Chef Ernie's sushi?
A)$80 and 80 thousand
B)$60 and 20 thousand
C)$50 and 100 thousand
D)$40 and 50 thousand

Accepted Answer

To find the equilibrium price and quantity, we need to set the demand and supply equations equal to each other and solve for Q:
$$80-Q_D=50+\frac{1}{2}Q_S$$
$$80-P=50+\frac{1}{2}(2P-100)$$
$$80-P=50+P-50$$
$$Q=20$$
To find the equilibrium price, we can substitute Q = 20 into either the demand or supply equation and solve for P:
$$Q_D=80-P$$
$$20=80-P$$
$$P=60$$
So the equilibrium price is $60 and the equilibrium quantity is 20, which in thousands is 20,000. Therefore, the best choice is B.

Question 14

Table 3.3
 $\begin{array}{|l|c|}
\hline \text { Demand } & \text { Supply } \
\hline P=80-Q D & P=50+1 / 2 Q S \
\hline Q D=80-P & Q S=2 P-100\
\hline
\end{array}$
-Refer to Table 3.3.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of economic surplus in this market?
A)$300 thousand
B)$600 thousand
C)$1,200 thousand
D)$1,600 thousand

Accepted Answer

The economic surplus is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. Producer surplus is the difference between the price producers receive for a good and the price they are willing to accept. In this case, the equilibrium price is $60 and the equilibrium quantity is 20 thousand units. The demand curve is P = 80 - QD, so the consumer surplus is the area below the demand curve and above the equilibrium price, which is a triangle with a base of 20 and a height of 20. The area of a triangle is (1/2) * base * height, so the consumer surplus is (1/2) * 20 * 20 = $200 thousand. The supply curve is P = 50 + 1/2 QS, so the producer surplus is the area above the supply curve and below the equilibrium price, which is also a triangle with a base of 20 and a height of 10. The area of a triangle is (1/2) * base * height, so the producer surplus is (1/2) * 20 * 10 = $100 thousand. The economic surplus is the sum of consumer surplus and producer surplus, so the economic surplus in this market is $200 thousand + $100 thousand = $300 thousand.

Question 15

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

Accepted Answer

When both the demand and supply curve shift left, it means that both the quantity demanded and quantity supplied of the product have decreased. As a result, the equilibrium point moves towards a lower quantity, which means that the equilibrium quantity will decrease.

Question 16

The following equations represent the demand and supply for silver pendants.
QD = 50 - 2P
QS = -10 + 2P
What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?
A)P = $15; Q = 20 thousand
B)P = $50; Q = 10 thousand
C)P = $20; Q = 15 thousand
D)P = $10; Q = 30 thousand

Accepted Answer

The answer of The following equations represent the demand and...

Question 17

The demand and supply equations for the apple market are:
Demand: P = 12 - 0.01Q
Supply: P = 0.02Q
Where P= price per bushel, and Q=quantity.
A)Calculate the equilibrium price and quantity.
B)Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value.
C)By how much would the $10 price change the quantity of apples demanded? Provide a numerical value.
D)Would there be a shortage or surplus of apples?
E)What is the size of this shortage or surplus? Provide a numerical value.

Accepted Answer

The answer of The demand and supply equations for the...

Question 18

All else equal, a successful marketing campaign for energy drinks would cause the equilibrium price of energy drinks to ________ and the equilibrium quantity of energy drinks to ________.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease

Accepted Answer

A successful marketing campaign would increase demand for energy drinks, leading to an increase in both equilibrium price and quantity.

Question 19

Discuss the correct and incorrect economic analysis in the following statements.
"The Canadian Auto Workers union has successfully negotiated a 9 percent increase in wages for its workers.This increase in the wage rate causes an increase in demand for automobiles, since many consumers now have greater incomes, and also causes a decrease in supply of automobiles because the cost of production has increased.These effects cancel each other out resulting in no change in the equilibrium price and quantity in the automobile market."

Accepted Answer

The answer of Discuss the correct and incorrect economic analysis...

Quiz 3: Where Prices Come From: the Interaction of Demand and Supply

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P then the corresponding price of fishing poles is represented by the equation

All else equal, an increase in the number of firms producing energy drinks will

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

If the quantity of donuts supplied is represented by the equation QS = -15 + 5P then the corresponding price of donuts is represented by the equation

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

If the price of hairspray is represented by equation P = 10 - 0.2 QD, then the corresponding quantity of hairspray demanded is represented by the equation

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants?

All else equal, a successful marketing campaign for energy drinks would cause the equilibrium price of energy drinks to and the equilibrium quantity of energy drinks to .