ECON 2302 LC4 Ch.4: Equilibrium: Where Supply Meets Demand
Recall that the demand curve presents your marginal benefit curve. With this in mind, and with no change in the availability of water, why is it that your willingness to pay for water is relatively small compared to other, nonessential to life, goods?
Because your water consumption is based on marginal benefit, not total benefit
Malik is a local politician running for governor in his state. What role does Malik play in the market for votes?
Demander
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
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
Which of the following is correct about the market for red delicious apples?
It is perfectly competitive, because many consumers want an identical good.
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
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
What effect on price and quantity would a big decrease in supply and a small increase in demand have?
Price increases; quantity decreases
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.
As a worker in the labor market, what role do you play?
Seller
A clothing manufacturer finds a cheaper supplier of wool for their winter coats. During this time, an unexpected cold front moves across the country. What effect will this have on price and quantity?
The effect on price is unknown; quantity rises.
When is it helpful to use the morning-evening method?
When analyzing a graph with both a supply and demand shift
What quick diagnostic tool can you use to assess whether or not a market is in equilibrium?
Whether or not prices are changing
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
Aika owns a flower shop. She finds that on Valentine 's Day, she sells out of every kind of flower and has no customers left waiting at the end of the day. This is an example of a market in:
equilibrium.
There is a decrease in demand. This means the new equilibrium price will be _____ and quantity will be _____.
lower; lower
A market in disequilibrium is identified by all of these symptoms EXCEPT
quantity demanded equaling quantity supplied.
Jamal is an engineer working at a large lithium-ion battery producer. He recently made a breakthrough causing the production cost of lithium-ion batteries used in smartphones to go down. In the market for smartphones, this innovation will cause the equilibrium quantity to _____ and the equilibrium price to _____.
rise; fall
Price is determined by the forces of _____ and _____.
supply; demand