Managerial Economics - Chapter 2
Which of the following will cause a change in quantity supplied?
A change in the market price of the good.
Qd = a + bP + cM + dPR where Qd = quantity demanded, P = the price of the good, M = income, PR = the price of a good related in consumption.If c = 15 and d = 20, the good is
A normal good AND a substitute for good R
Which of the following would lead to an INCREASE in the demand for golf balls?
An increase in average household income when golf balls are a normal good.
Which of the following would decrease the supply of wheat?
An increase in the price of corn.
With a given supply curve, a decrease in demand leads to
a decrease in equilibrium price and a decrease in equilibrium quantity.
Consumer surplus...
is never negative.
Suppose an individual buyer values a pound of butter at $10. If the market price of butter is $8, what is the consumer surplus for this buyer? $0
$2
Suppose that the market for engagement rings is in equilibrium. Then political unrest in South Africa shuts down the diamond mines there. South Africa is the world's primary supplier of diamonds. What will happen?
The equilibrium quantity of engagement rings will decrease.
Qs = 40 + 6P - 8PI + 10F where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Suppose PI = $40, F = 50, and the demand function is Qd = 700 - 6P , then if government sets a price of $50 what will be the result?
a surplus of 120
If input prices increase, all else equal,
supply will decrease.
Demand: Qd = 900 - 60P Supply: Qs = -200 + 50P If the price is currently $11, there is a
surplus of 110 units.
Qd = 680 - 9P + 0.006M - 4PR where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P , then, when the price of the good is $40,
there is a shortage of 180 units of the good.
Qd = 100 - 5P + 0.004M - 5PR where P is the price of good X, M is income, and PR is the price of a related good, R. Income is $100,000, the price of the related good is $20, and the supply function is Qs = 150 + 5P. What is the equilibrium price?
$25
Qs = 40 + 6P - 8PI + 10F where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Now suppose PI = $40 and F = 50, what is the largest amount of the good that firms will supply when the price of the good is $20?
340 units
If the price of a complement increases, all else equal
Demand will decrease
Qd = 100 - 5P + 0.004M - 5PR, where P is the price of good X, M is income and PR is the price of a related good, R. If M = $40,000 and PR = $20 and the supply function is Qs = 85 + 10P, market price and output are, respectively,
P = $5 and Q = 135.
Use the following demand and supply functions to answer the next question: Demand: Qd = 600 - 30P Supply: Qs = -300 + 120P Equilibrium price and output are
P = $6 and Q = 420.
Qs = 60 + 8P - 4PI + 20F, where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. When PI = $20 and F = 60, the INVERSE supply function is
P = -147.5 + 0.125Qs.
Qd = 100 - 5P + 0.004M - 5PR, where P is the price of good X, M is income and PR is the price of a related good, R. What is the demand function when M = $40,000 and PR = $20?
Qd = 160 - 5P
Qd = 680 - 9P + 0.006M - 4PR where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20, the demand function is
Qd = 690 - 9P.
Which of the following will cause a change in quantity supplied? - a change in input prices - a technological change - a change in the number of firms in the market - a change in the market price of the good
a change in the market price of the good
Qd = 100 - 5P + 0.004M - 5PR where P is the price of good X, M is income, and PR is the price of a related good, R.From the demand function it is apparent that related good R is
a complement for good X.
Qd = 100 - 5P + 0.004M - 5PR, where P is the price of good X, M is income and PR is the price of a related good, R. From the demand function it is apparent that related good R is
a complement for good X.
Qd = 100 - 5P + 0.004M - 5PR, where P is the price of good X, M is income and PR is the price of a related good, R. From the demand function it is apparent that good X is
a normal good.
If the price of a complement for tires decreases, all else equal,
demand for tires will increase.
Yesterday's newspaper reported the results of a study indicating that people who eat more bananas are more attractive to the opposite sex. What do you expect to happen to the market price and quantity of bananas?
price will increase, quantity will increase
Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to
rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would fall.
Demand: Qd = 50 - 4P Supply: Qs = 20 + 2P If the price is $2, there is a
shortage of 18 units.
