Micro assignment 2

suppose that tom bought a bike from helen for $195. If helens reservation price was $185 and tom's reservation price was $215, the total economic surplus from this transaction was

$30

Suppose you observe a decrease in the equilibrium price and quantity of corn. Of the options listed below, this is best explained by

a fall in consumer income assuming corn is a normal good

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

excess supply will lead the price to fall

assume that Joe is willing to produce a hamburger for $1, and Mary is willing to pay $3 for a hamburger. Which of the following is true?

Joe and mary can make a mutually beneficial exchange

The price of bananas will increase in response to

an excess demand for bananas

What might cause a demand curve to shift to the right

an increase in the price of a substitute

It is likely that for most people

coffee and tea are substitutes

Suppose that when the price of oranges is $3 per pound, the quantity demanded is 4.7 tons per day and the quantity supplied is 3.9 tons. In this case:

excess demand will lead the price of oranges to rise

Shelly purchases a leather purse for $400. One can infer that

her reservation price was at least $400

if the local slaughterhouse gives off an unpleasant stench, then the equilibrium quantity of meat will be _____ the quantity that maximizes total economic surplus

higher than

if the demand for a good decreases as income decreases, then the good is a

normal good

If pencils and paper are complements for most consumers, then if the price of paper increases, you would expect

the equilibrium price and quantity of pencils to fall

The entire group of buyers and sellers of a particular good or service makes up

the market

when a market is in equilibrium

there is neither excess demand nor excess supply