Question 1

The price of good X has a pattern such that P = $3 on Monday through Thursday of every week,and P = $2 on Fridays.If speculators begin participating in the market for good X,their actions will likely lead to a(n)______________ in the price of good X on Monday through Thursday and a(n)_______________ in the price of good X on Friday.

Accepted Answer

If speculators begin participating in the market for good X with the intent to make a profit, they are likely to buy up large quantities of the good on Monday through Thursday when the price is higher. This will increase demand and push the price up even further. On Friday, when the price drops to $2, speculators may choose to sell off their excess supply, which will flood the market and reduce prices, leading to a decrease in the price of good X.

Question 2

Profit can be earned by buying _____________ and selling ____________________.

Accepted Answer

To earn a profit, an individual needs to buy something at a low price and sell it at a higher price. Therefore, option B - buying low and selling high - is the best choice.

Question 3

-Refer to Exhibit 5-5.If the airline charges price P₂ for both aisle seats and middle seats,the result will be

Accepted Answer

At price P₂, demand for middle seats would be less than supply, leading to a surplus of middle seats. For aisle seats, this price would match the equilibrium price, where supply equals demand, resulting in the equilibrium quantity of aisle seats.

Question 4

-Refer to Exhibit 5-5.If the airline charges a price that is higher than P₂,the result will be a ________________ of middle seats and a ____________ of aisle seats.

Accepted Answer

The answer of 
-Refer to Exhibit 5-5.If the airline charges...

Question 5

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively ______________from Phoenix to Miami since the ___________________.

Accepted Answer

The U-Haul rates will likely be lower from Phoenix to Miami because the demand for moving trucks in Phoenix is lower due to more people wanting to move from Miami to Phoenix than the other way around. This creates an excess supply of trucks in Phoenix, leading to lower rental rates to encourage their use.

Question 6

The price of good B has a pattern such that P = $20 on Monday through Thursday of every week,and P = $25 on Fridays.If speculators begin participating in the market for good B,their actions will likely lead to a(n)______________ in the price of good B on Monday through Thursday and a(n)_______________ in the price of good B on Friday.

Accepted Answer

Speculators will likely buy on Monday through Thursday when the price is lower, increasing demand and thus the price. On Friday, they might sell to take advantage of the higher price, increasing supply and potentially decreasing the price.

Question 7

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy,and the equilibrium price of good X will be __________ with the subsidy than without.

Accepted Answer

With the subsidy, the demand for good X will increase, shifting the demand curve to the right. Therefore, the equilibrium price will be higher with a subsidy than without. Option C is the only choice that reflects this scenario. Option D would be incorrect because a rightward shift in the demand curve increases the equilibrium quantity, which would cause an increase in price.

Question 8

The higher the price of medical care in general,the lower the __________________ medical care and the ________________ specific items that make up medical care (such as,x-rays).

Accepted Answer

According to the law of demand, as price increases, quantity demanded decreases. Therefore, the higher the price of medical care, the lower the quantity demanded of medical care overall and the lower the demand for specific items that make up medical care.

Question 9

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change.Based upon this information we can conclude that the demand curve for good Z is ________________ and the supply curve for good Z is ________________.

Accepted Answer

The demand curve for good Z is downward sloping because as the price falls, the quantity demanded rises. The supply curve is vertical because the quantity supplied does not change with a change in price, indicating perfectly inelastic supply.

Question 10

-Refer to Exhibit 5-6.Under law 1 a renter has 30 days to vacate an apartment after being served with an eviction notice.Under law 2,the renter has 90 days to vacate after being served with an eviction notice.This graph shows that the supply of apartments is____________ under law 1 than under law 2,and thus apartment rent is _______________ under law 1 than under law 2.

Accepted Answer

The answer of 
-Refer to Exhibit 5-6.Under law 1 a...

Question 11

The lower the price of medical care in general,the higher the _________________ medical care and the _______________ specific items that make up medical care (such as x-rays).The result will be a _______________ price for the specific items that make up medical care.

Accepted Answer

When the price of medical care decreases, the quantity demanded of medical care increases, leading to a higher demand for specific items, resulting in a higher price for those items due to increased demand.

Question 12

-Refer to Exhibit 5-5.If the airline charges a price that is between P₁ and P₂ for both aisle seats and middle seats,the result will be

Accepted Answer

Charging a price between those two points means the price is below the equilibrium for aisle seats (leading to higher demand than supply, hence a shortage) and above the equilibrium for middle seats (leading to lower demand than supply, hence a surplus).

Question 13

Suppose that a subsidy is provided for the consumption of good ABC,and the subsidy is different for different units of good ABC (e.g.,$10 subsidy on the first unit of good ABC and $7 on the second unit of good ABC,etc.).The demand curve with such a subsidy will lie to the ______________ of the demand curve without a subsidy,__________ parallel to the demand curve without any subsidy.

Accepted Answer

The demand curve with a subsidy will lie to the right of the demand curve without a subsidy because the subsidy effectively lowers the price of the good, increasing the quantity demanded. However, since the subsidy amount changes with different units, the shift will not be parallel, as the price reduction varies across different quantities.

Question 14

-Refer to Exhibit 5-5.Based upon the information provided in this graph,the supply of aisle seats is __________ the supply of middle seats,and the demand for aisle seats is _______________ the demand for middle seats.

Accepted Answer

The supply of aisle seats is the same as the supply of middle seats because the supply curves for both types of seats overlap or are drawn identically in the graph. The demand for aisle seats is greater than the demand for middle seats, as indicated by the demand curve for aisle seats lying above the demand curve for middle seats, showing higher quantities demanded at each price level.

Question 15

If the government enacts legislation which allows lenders to lower lending standards,the government indirectly___________ the demand for which leads to _________ house prices.

Accepted Answer

Lowering lending standards makes it easier for more people to qualify for mortgages, which increases the demand for houses. As demand increases, house prices typically rise.

Question 16

Suppose that a toll of $15 is charged to drive on a road,regardless of the time of day.If this toll brings about equilibrium travel flows at the busiest time of day,it will create __________ at all other times of day.

Accepted Answer

A toll that brings about equilibrium travel flows at the busiest time of day is likely to be too high for less busy times, leading to a surplus of toll road space as demand decreases.

Question 17

-Refer to Exhibit 5-5.If the airline charges price P₁ for both aisle seats and middle seats,the result will be

Accepted Answer

The answer of 
-Refer to Exhibit 5-5.If the airline charges...

Question 18

The lower the price of medical care in general,the higher the ____________________________ medical care and the ______________________ specific items that make up medical care (such as x-rays).

Accepted Answer

According to the law of demand, as the price of a good/service decreases, the quantity demanded of it increases. Therefore, as the price of medical care decreases, the quantity demanded of it will increase. Additionally, since medical care is a necessity and there is no close substitute for it, the lower the price of medical care, the higher the demand for it. As a result, the demand for specific items that make up medical care, such as x-rays, will also increase.

Question 19

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

Accepted Answer

The subsidy will make higher education more affordable, which will increase the demand for it. This will shift the demand curve to the right, leading to a higher equilibrium price.

Question 20

At college ABC and at college XYZ,students pay $15,000 less than the equilibrium tuition.If the supply of openings is the same at both colleges,it follows that a shortage of openings will be greater at

Accepted Answer

A shortage of openings will be greater at college ABC than at college XYZ if the demand is greater at college ABC, because a higher demand with the same supply and reduced tuition price exacerbates the shortage.

Quiz 5: Supply,demand,and Price: Applications

Profit can be earned by buying _ and selling ________.

-Refer to Exhibit 5-5.If the airline charges price P₂ for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.If the airline charges a price that is higher than P₂,the result will be a ____ of middle seats and a of aisle seats.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively from Phoenix to Miami since the _____.

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy,and the equilibrium price of good X will be with the subsidy than without.

The higher the price of medical care in general,the lower the __ medical care and the specific items that make up medical care (such as,x-rays) .

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change.Based upon this information we can conclude that the demand curve for good Z is and the supply curve for good Z is .

The lower the price of medical care in general,the higher the _________ medical care and the _ specific items that make up medical care (such as x-rays) .The result will be a _________ price for the specific items that make up medical care.

-Refer to Exhibit 5-5.If the airline charges a price that is between P₁ and P₂ for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.Based upon the information provided in this graph,the supply of aisle seats is the supply of middle seats,and the demand for aisle seats is _____ the demand for middle seats.

If the government enacts legislation which allows lenders to lower lending standards,the government indirectly___ the demand for which leads to _ house prices.

Suppose that a toll of $15 is charged to drive on a road,regardless of the time of day.If this toll brings about equilibrium travel flows at the busiest time of day,it will create __________ at all other times of day.

-Refer to Exhibit 5-5.If the airline charges price P₁ for both aisle seats and middle seats,the result will be

The lower the price of medical care in general,the higher the ______ medical care and the specific items that make up medical care (such as x-rays) .

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be _ with the subsidy than without because the demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy.

At college ABC and at college XYZ,students pay $15,000 less than the equilibrium tuition.If the supply of openings is the same at both colleges,it follows that a shortage of openings will be greater at

Quiz 5: Supply,demand,and Price: Applications

Profit can be earned by buying _____________ and selling ____________________.

-Refer to Exhibit 5-5.If the airline charges price P2 for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.If the airline charges a price that is higher than P2,the result will be a ________________ of middle seats and a ____________ of aisle seats.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively ______________from Phoenix to Miami since the ___________________.

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy,and the equilibrium price of good X will be __________ with the subsidy than without.

The higher the price of medical care in general,the lower the __________________ medical care and the ________________ specific items that make up medical care (such as,x-rays) .

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change.Based upon this information we can conclude that the demand curve for good Z is ________________ and the supply curve for good Z is ________________.

The lower the price of medical care in general,the higher the _________________ medical care and the _______________ specific items that make up medical care (such as x-rays) .The result will be a _______________ price for the specific items that make up medical care.

-Refer to Exhibit 5-5.If the airline charges a price that is between P1 and P2 for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.Based upon the information provided in this graph,the supply of aisle seats is __________ the supply of middle seats,and the demand for aisle seats is _______________ the demand for middle seats.

If the government enacts legislation which allows lenders to lower lending standards,the government indirectly___________ the demand for which leads to _________ house prices.

Suppose that a toll of $15 is charged to drive on a road,regardless of the time of day.If this toll brings about equilibrium travel flows at the busiest time of day,it will create __________ at all other times of day.

-Refer to Exhibit 5-5.If the airline charges price P1 for both aisle seats and middle seats,the result will be

The lower the price of medical care in general,the higher the ____________________________ medical care and the ______________________ specific items that make up medical care (such as x-rays) .

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

At college ABC and at college XYZ,students pay $15,000 less than the equilibrium tuition.If the supply of openings is the same at both colleges,it follows that a shortage of openings will be greater at

Profit can be earned by buying _ and selling ________.

-Refer to Exhibit 5-5.If the airline charges price P₂ for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.If the airline charges a price that is higher than P₂,the result will be a ____ of middle seats and a of aisle seats.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively from Phoenix to Miami since the _____.

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy,and the equilibrium price of good X will be with the subsidy than without.

The higher the price of medical care in general,the lower the __ medical care and the specific items that make up medical care (such as,x-rays) .

As the price of good Z falls,the quantity demanded of good Z rises,but the quantity supplied of good Z does not change.Based upon this information we can conclude that the demand curve for good Z is and the supply curve for good Z is .

The lower the price of medical care in general,the higher the _________ medical care and the _ specific items that make up medical care (such as x-rays) .The result will be a _________ price for the specific items that make up medical care.

-Refer to Exhibit 5-5.If the airline charges a price that is between P₁ and P₂ for both aisle seats and middle seats,the result will be

-Refer to Exhibit 5-5.Based upon the information provided in this graph,the supply of aisle seats is the supply of middle seats,and the demand for aisle seats is _____ the demand for middle seats.

If the government enacts legislation which allows lenders to lower lending standards,the government indirectly___ the demand for which leads to _ house prices.

-Refer to Exhibit 5-5.If the airline charges price P₁ for both aisle seats and middle seats,the result will be

The lower the price of medical care in general,the higher the ______ medical care and the specific items that make up medical care (such as x-rays) .

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be _ with the subsidy than without because the demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy.