MICRO - MOD 2 - CH 3 - HW

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact would you expect this event to have on the following?a. The supply of cattle hides: (Click to select) Increase Decrease No change b. Hide prices: (Click to select) No change Increase Decrease c. The supply of leather goods: (Click to select) No change Increase Decrease d. The price of leather goods: (Click to select) Decrease No change Increase

Decrease Increase Decrease Increase

ADVANCED ANALYSIS Assume that demand for a commodity is represented by the equation P=10−0.2Qd.P=10−0.2Qd. Supply is represented by the equation P=2+0.2Qs,P=2+0.2Qs,where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price. Instructions: Enter your answers as a whole number. Using the equilibrium condition Qs = Qd, solve the equations to determine equilibrium price and equilibrium quantity. Equilibrium price = $ Equilibrium quantity = units

EP = $6 EQ = 20 Units

Label each of the following scenarios with the correct combination of price change and quantity change. In some scenarios, it may not be possible from the information given to determine the direction of a particular price change or a particular quantity change. We will symbolize those cases as, respectively, "P?" and "Q?". a. On a hot day, both the demand for lemonade and the supply of lemonade increase. Price: (Click to select) Increases P? Decreases Quantity: (Click to select) Increases Q? Decreases b. On a cold day, both the demand for ice cream and the supply of ice cream decrease. Price: (Click to select) P? Decreases Increases Quantity: (Click to select) Q? Increases Decreases c. When Hawaii's Mt. Kilauea erupts violently, tourists' demand for sightseeing flights increases but the supply of pilots willing to provide these dangerous flights decreases. Price: (Click to select) Decreases Increases P? Quantity: (Click to select) Increases Decreases Q? d. In a hot area of Arizona where a lot of electricity is generated with wind turbines, the demand for electricity falls on windy days as people switch off their air conditioners and enjoy the breeze. But at the same time, the amount of electricity supplied increases as the wind turbines spin faster. Price: (Click to select) P? Decreases Increases Quantity: (Click to select) Decreases Q? Increases

a. P? ; Quantity Increases b. P? ; Quantity decreases c. P increases ; Q? d. P decreases ; Q?

Which statement is consistent with the law of supply? multiple choice 1An increase in market price will lead to an increase in quantity supplied.A decrease in market price will lead to an increase in quantity supplied.At a zero price, quantity supplied will be infinite.An increase in market price will lead to a decrease in quantity supplied. Why does the supply curve slope upward? To answer this question, use the choices below to identify the characteristics of an upward-sloping supply curve. Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. check all that apply Increasing opportunity costs Increasing marginal costs Diminishing marginal utility A decrease in resource prices An increase in resource prices Increasing labor productivity How is the market supply curve derived from the supply curves of individual producers? multiple choice 2By using the largest quantity supplied among all producers for each priceBy adding up the quantities supplied by all individual producers for each priceBy adding up the prices paid for each unit supplied by producersBy calculating the average quantity supplied among all producers

a. an increase in price will lead to increase in quantity supplied b. Increasing opportunity costs & Increasing marginal costs c. By adding up the quantities supplied by all individual producers for each price

Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the following table. Thousands of Bushels DemandedPrice per BushelThousands of Bushels Supplied85$ 3.4072803.7073754.0075704.3077654.6079604.9081 Suppose that the government establishes a price ceiling of $3.70 for wheat. a. What might prompt the government to establish this price ceiling? multiple choice 1To use it as income support for farmersTo use it as a form of trade barrierTo control food pricesTo encourage production b. In the diagram below, demonstrate a price ceiling of $3.70. Instructions: Use the tool provided 'Ceiling' to demonstrate a price ceiling of $3.70 for wheat. Plot only the endpoints of the line (2 points total). Instructions: Use the tool provided 'Ceiling' to demonstrate a price ceiling of $3.70 for wheat. Plot only the endpoints of the line (2 points total). c. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect of this price floor? multiple choice 2It will establish the equilibrium quantity.It will create a shortage.It will create a surplus.It will eliminate the market for wheat.

a. to control food prices b. plot points = 3.7, 73 & 3.7, 80 c. it will create a surplus

Refer to the table below. a. What is the equilibrium price in this market? $ per bushel At what price is there neither a shortage nor a surplus? $ per bushel Fill in the surplus-shortage column (gray-shaded cells) and use it to confirm your answers. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. b. Graph the demand for wheat and the supply of wheat. Be sure to locate the equilibrium price and equilibrium quantity. Instructions: Use the tools provided 'Supply' and 'Demand' to draw the demand and supply curves using the data in the table. Include each price-quantity combination. Each line should contain 6 reference points. Then use the tool provided 'Eq' to identify the equilibrium price and quantity. Instructions: Do not use a minus sign when entering your answers. c. How big is the surplus or shortage at $3.40? There is a (Click to select) surplus shortage of thousand bushels. How big is the surplus or shortage at $4.90? There is a (Click to select) surplus shortage of thousand bushels. How big a surplus or shortage results if the price is 60 cents higher than the equilibrium price? There is a (Click to select) surplus shortage of thousand bushels How big a surplus or shortage results if the price is 30 cents lower than the equilibrium price? There is a (Click to select) shortage surplus of thousand bushels rev: 07_02_2020_QC_CS-218608

a.1. 4 a.2. 4 b. Surplus or Shortage (+) or (-) D = 88, 81, 75, 70, 66, 63 S = 65, 71, 75, 78, 80, 81 P = 3.4, 3.7, 4.0, 4.3, 4.6, 4.9 Short or Surp = -23, -10, 0, 8, 14, 18 c. Plot Points S = 65, 3.4; 71,3.7; 75,4.0; 78,4.3; 80,4.6; 81,4.9 D = 88,3.4; 81,3.7; 75,4.0; 70,4.3; 66,4.6; 63,4.9 E = 75,4.0 d. shortage of 23; surplus of 18; surplus of 14; shortage of 10

A price ceiling will result in a shortage only if the ceiling price is:

less than the equilibrium price

In which of these two statements are the terms "supply" and "demand" used correctly?A. "In the corn market, demand often exceeds supply, and supply sometimes exceeds demand."B. "The price of corn rises and falls in response to changes in supply and demand." multiple choiceStatement AStatement B

statement B

Critically evaluate: "In comparing the two equilibrium positions in the figure below, I note that a smaller amount is actually demanded at a lower price. This observation refutes the law of demand." a. A decrease in demand from D1 to D2 results in a (Click to select) shortage surplus .b. This causes the price to (Click to select) rise fall .c. This change in price results in (Click to select) a decrease an increase in quantity demanded along demand curve D2.d. This change in price results in (Click to select) an increase a decrease in quantity supplied.e. The new equilibrium has a (Click to select) lower price higher price and (Click to select) lower quantity higher quantity when compared to the original equilibrium.f. Does this refute the law of demand: (Click to select) Yes No .g. Why: (Click to select) Because there was a change in demand Because the new equilibrium has a lower price and quantity .

surplus fall increase decrease lower price lower quantity no bc change in demand