Micro Economics

Using the graph, what is the price of gas when the quantity supplied is 1.5 billion barrels and the quantity demanded is 2.4 billion barrels? What effect will this have on the market?

$2; the price will increase until reaching equilibrium

Using the graph, what is the price of gas when the quantity supplied is 2.5 billion barrels and the quantity demanded is 1.6 billion barrels? What effect will this have on the market?

$4; the price will fall until reaching equilibrium

In the market for TVs, the equilibrium price is $500 and the equilibrium quantity is 10,000. What would occur at a price of $400 per TV assuming nothing in the market changes?

A shortage would be created, and quantity demanded would exceed quantity supplied.

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 goods?

Because your water consumption is based on marginal benefit, not total benefit.

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.

Krishan goes to a local bank to make a deposit in his savings account. While there, he considers the principles of economics that he has been learning at the university. He concludes that in this situation he is a supplier of credit. How is this so?

He is supplying the bank with his savings, which the bank will in turn lend out to other borrowers.

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

Raise the price of bagels.

A clothing manufacturer finds a cheaper supplier of wool for their winter coats. At the same time, the winter months are coming up. What effect will this have on price and quantity?

The effect on price is unknown; quantity rises.

Jose works at a cellular service provider. He often offers people discounts if they also agree to buy a case and an extra charger from him. Given that Jose had to do this to sell phones, what can be said about the market?

There is a surplus.

An increase in demand causes both price and quantity to go up because:

at a higher price level, companies have an incentive to produce more, creating a new equilibrium.

When you take out a loan to buy a home, you are on the _____ side in the market for _____.

demand; credit

Advertising can shift the _____ curve and is considered as a change in _____.

demand; preferences

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

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

If prices are free to adjust, then eventually a:

market will reach equilibrium.

Mrs. Johnson decides that she is going to create her own country. She determines that she will be in charge of all production matters because she knows how to do things more efficiently than anybody else. What kind of economy has Mrs. Johnson effectively created?

planned

All of these factors shift the demand curve EXCEPT:

productivity

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

demander

Jamal is an engineer working at a large lithium-ion battery production facility. 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

Demand shifts lead price and quantity to go in the _____ direction, and supply shifts lead price and quantity to go in the _____ direction.

same; opposite

Stella owns a gas station that Ezekiel frequents. In terms of the market for gasoline, Stella is the _____ and Ezekiel is the _____.

supplier; demander