Ch. 4: Equilibrium: Where Supply Meets Demand

Dr. Larson is a professor at a state university. He is known for being tough but fair in his grading, and rarely gives out A's on his assignments. Considering that Dr. Larson is on the supply side and his students are on the demand side, why is it so difficult to attain an A?

Demand is high, so price is high.

Malik is a local politician running for governor in his state. What role does Malik play in the market for votes?

Demander

A taxi company finds success in its city of operation. Due to this success, a new company comes into town to try and compete with the original company. What has the inclusion of this new company created, and what shift will it cause in the market?

Increased number of sellers; increase in supply

A guitar manufacturer finds a cheaper source for wood in the production of their electric guitars. During this time, a sharp decrease occurs in the popularity of rock music in favor of electronic dance music created using computers. What effect will this have on price and quantity?

Price falls; the change in quantity is unknown

Suppose you are a manager at a local coffee shop. You notice that every day by 8AM you are entirely sold out of bagels, but have at least 20 people ask for bagels later in the day. Which of the following decisions would result in the best outcome for your shop?

Raise the price of bagels

Suppose there is a major winter storm forecasted. People expect the storm to be so bad that they won't be able to leave their houses for about a week. What do you expect to happen to the price of essential groceries and why?

The price of essential groceries is likely to rise as demand for those groceries increases as people stock up to weather the storm.

Julie's family is preparing for their Fourth of July cookout, so they head to the local grocery store. Among the pandemonium they are able to obtain everything on their shopping list, including hot dogs and hamburgers. In the market for hamburgers, the Fourth of July creates an increase in the _____for hamburger and a(n) _____ in the equilibrium price and quantity of hamburgers

demand; increase

A wildly popular but aging rock band announces that their upcoming tour will be the last one before they retire. What effect will this likely have in the market for this band's concert tickets?

increase in demand

An economy where individuals make their own production and consumption decisions by buying and selling in markets is referred to as a _____ economy.

market

Mr. Lu decides that he is going to create his own country. He determines that production matters will be determined by the individuals in the market as far as all production and consumption decisions go. What kind of economy has Mr. Lu effectively created?

market

Movement along the demand curve due to a change in price is referred to as a change in _____.

quantity demanded

James goes to a concert at the amphitheater by his house. During the encore, the drummer throws one of his drum sticks into the crowd and James catches it. James doesn't have much interest in memorabilia, so he decides to list the drumstick on eBay. In the market for this band's memorabilia, James is a:

seller

When quantity demanded exceeds the quantity supplied, a(n) _____ occurs.

shortage

Priya is a student at Florida State University. She graduates soon and has started applying for jobs at various companies. What role is Priya playing in the labor market?

supplier

If prices are rising, what can be stated about the observed market?

the quantity demanded exceeds the quantity supplied.

Auction houses, coffee shops, and the New York Stock Exchange are different, and yet they are all considered markets because:

they bring buyers and sellers together.