ECON 300
Which one of the following would NOT occur if the market price was above the market-clearing price?
consumers would bid up the price there would be a surplus
Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why?
in the long run as new substitutes enter the market
What about the price elasticity of demand for televisions? The price elasticity of demand for televisions should be larger
in the short run because televisions are durable
suppose that unusually cold weather causes the demand curve for ice cream to shift to the left. why will the price of ice cream fall to a new market-clearing level?
The cold weather will shift the demand curve to the left, initially creating a surplus until the price falls to where Qs is equal to Qd
Suppose the government regulates the price of beef and chicken and sets them below their market-clearing levels. Explain why shortages of these goods will develop. The shortages will develop because at prices set below market-clearing levels firms will supply_________ than customers want The extent of the excess demand implied by the shortages will depend on
less the elasticities of supply and demand, where the shortages will be smaller if both supply and demand are more inelastic.
For most industries, supply is _______ in the short run than in the long run.
less elastic
Suppose the demand curve for a product is given by: Q=300-2P+4I, where I is average income measured in thousands of dollars. The supply curve is: Q=3P-150. If I=25, find the market-clearing price and quantity for the product. if I = 50?
market clearing price is 110 market clearing quantity 180 50: price 130 Quantity 240
Why do long-run elasticities of demand differ from short-run elasticities? Long-run elasticities of demand differ from short-run elasticities because
It takes consumers time to react to price changes and durable goods last a relatively long time
what would cause the demand for kerosene heaters to increase
a decrease in the price of kerosene ( an input)
Even though the annual consumption of copper is now about 100 times greater than it was in 1880, the real price of copper has remained relatively unchanged. Which of the following help account for this pattern? a. more efficient tech B. new depositis are cheaper to mine c. demand for copper has grown d. all of the above
all of the above
Do you think this policy will benefit all students? Why or why not? As a result of the rent controls
students who do not get an apartment will be worse off in that they will have to live outside the college town. students who get an apartment might be worse off because it will be more expensive to look for another someone that gets an apartment is better because they pay less rent
what happens to the market supple curve if the costs of production increase
supply curve moves to the left
Which one of the following would not cause the demand for Coca-Cola to shift?
the cost of producing coca cola increases