Economics Problem Set 3
Many store clothing stores often have clearance sales at the end of each season. Which of the following provides the best explanation for this? a. At the end of the season, the quantity demanded on some items is less than the quantity supplied b. At the end of the season, the quantity demanded on some items is greater than the quantity supplied c. At the end of the season, the demand for last-season items increases, leading clothing stores to decrease prices. d. There is a tradition in the clothing retail industry to decrease prices at the end of every season to attract new customers
a
<---2. Equilibrium price of bricks a. increases b. may increase or decrease, but it is impossible to know for sure c. remains constant d. decreases
a
<---2. What will happen with supply in the market for ethanol? a. Supply of ethanol will decrease b. Supply of ethanol will increase c. Supply of ethanol will not change
a
<---a Surplus exists a. when quantity supplied exceeds quantity demanded b. when quantity demanded exceeds quantity supplied c. anytime the market is out of equilibrium d. at the market clearing price
a
Suppose that an economic downturn decreases household wealth and erodes consumer confidence. Describe the primary effect this would have on the market for online music. You can assume that online music is normally good. Additionally, select the end result of equilibrium price and quantity. 1. What will happen with demand in the market for online music? a. Demand for online music will decrease b. Demand for online music will not change c. Demand for online music will increase
a
When the crime rate falls in the area around a factory, what probably happens to wages at that factory? a. Wages do not change in response to changes in crime b. Wages fall due to an increase in labor demand c. Wages rise due to a decrease in labor supply d. Wages fall due to an increase in labor supply
a
The price that results when quantity demanded equals quantity supplied is most correctly called the a. equitable price b. stable price c. non-surplus price d. equilibrium price
d
When supply falls, what happens to quantity demanded in equilibrium? (This should get you to notice that both suppliers and demanders change their behavior when once curve shifts.) Quantity demanded a. does not change b. may change in either direction c. rises d. falls
d
<--what happens to the graph: _________ curve shifts to the __________
demand, right
<----3. Equilibrium price a. increases b. remains constant c. decreases d. may increase or decrease, but it is impossible to know for sure
a
(look at # 10 Problem set 3 graph) Suppose the cost of lithium-ion batteries, an input in the production of electric vehicles, has dropped more steeply than expected. The accompanying graph depicts the market for electric vehicles. Demonstrate the effect of a reduction in the price of lithium-ion batteries by adjusting the accompanying diagram. 1. Equilibrium price is now $ _____ thousand 2. Equilibrium quantity is now ____ thousand
40, 6
<----3. Equilibrium price of online music a. increases b. decreases c. remains constant d. change is ambiguous
b
<----4. Equilibrium quantity of online music a. increases b. decreases c. remains constant d. change is ambiguous
b
<---2. Equilibrium quantity a. may increase or decrease, but it is impossible to know for sure b. increases c. remains constant d. decreases
b
<---4. Equilibrium quantity a. may increase or decrease, but it is impossible to know for sure b. increases c. decreases d. does not change
b
Stone and brick are substitutes in home construction. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Describe the impact this will have on the market for bricks 1. What will happen with supply and demand in the market for bricks? a. Demand for bricks will decrease b. Demand for bricks will increase c. Supply of bricks will increase d. Supply of bricks will decrease
b
Suppose the cost of lithium-ion batteries, an input into the production of electric vehicles, has dropped more steeply than expected. 1. What will happen with demand in the market for electric vehicles? a. Demand for electric vehicles will decrease b. Demand for electric vehicles will not change c. Demand for electric vehicles will increase
b
The U.S government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. Describe how reducing the subsidy will affect supply and/or demand, equilibrium price, and equilibrium quantity in the ethanol market by answering the questions that follow 1.What will happen with demand in the market for ethanol? a. Demand for ethanol will decrease b. Demand for ethanol will not change c. Demand for ethanol will increase
b
<----2. What will happen with supply in the market for electric vehicles? a. Supply of electric vehicles will decrease b. Supply of electric vehicles will not change c. Supply of electric vehicles will increase
c
<----3.Equilibrium price a. does not change b. increases c. decreases d. may increase or decrease, but it is impossible to know for sure
c
<----4. Equilibrium quantity a. remains constant b. may increase or decrease, but it is impossible to know for sure c. decreases d. increases
c
<---2. What will happen with supply in the market for online music? a. Supply of online music will decrease b. Supply of online music will increase c. Supply of online music will not change
c
<---3. Equilibrium quantity of bricks a. may increase or decrease, but it is impossible to know for sure b. remains constant c. increases
c
Suppose that there has been a sudden influx of refugees in the small town of Dalton, leading to a doubling of the local population. The accompanying graph depicts Dallon's market for food. Adjust the graph to show the immediate impact that this rise in population has on the food market. Then determine what happens to the equilibrium price and quantity 1. Equilibrium price a. decreases b. may increase or decrease, but is impossible to know for sure c. increases d. remains constant
c
<---what happens to the graph: the ______ curve shifts to the ______
supply, right
