quiz module 2

Given the graph below, what is the equilibrium quantity and price in the market?

Equilibrium occurs where the demand curve and supply curve intersect, in this case they intersect at a quantity of 200 and a price of $3.25.

The graph below shows the market for labor (coal miners). New coal-mining equipment is invented that is cheap and requires fewer workers to run. Demonstrate the effect this equipment has on the demand for coal miners.

• demand decreases The new coal mining equipment is a substitute for coal miners. When coal companies invest in this equipment, their demand for coal workers decreases or shifts to the left. This lowers the equilibrium wage and quantity of coal miners. Note that the supply of coal miners does not change.

A popular celebrity figure was seen sporting a handbag from Designer X, which caused a significant jump in popularity of the designer. In the graph below, show how demand for handbags from Designer X is impacted by this change by shifting the appropriate curve.

• demand increases An increase in popularity results in an increase, or rightward shift, in demand. A shift in demand means that at any price (and at every price), the quantity demanded will be different than it was before.

Suppose the market for coffee shop workers is currently in equilibrium. If the number of coffee shops increases, which of the following are consequences?

• equilibrium wage will rise • equilibrium quantity will rise (An increase in the demand for coffee shop workers shifts the labor demand curve to the right. With this shift, the new equilibrium point in the market will consist of a higher wage and higher quantity of coffee shop workers.)

In which direction does the supply curve shift if the end result is the equilibrium quantity decreasing while the demand is decreasing given the graph below? Move both the demand and supply curves to illustrate the changes.

• supply decreases • demand decreases Whenever supply and demand shift in the same direction, the effect on equilibrium price is unknown, while the effect on equilibrium quantity is known. When demand decreases, both the equilibrium price and quantity decreases. When supply decreases, the equilibrium price increases while the equilibrium quantity decreases. The effect is that the equilibrium quantity will definitely decrease, but the effect on equilibrium price is unknown.

Suppose that a soda company starts to produce cans of soda using an assembly line which increases productivity drastically. In the graph below, demonstrate the impact on the market for cans of soda by shifting the appropriate curve.

• supply increases Improvements in technology typically make production more efficient and less costly which increase supply. The introduction of the assembly line for cans of soda did both of these things, causing an increase in supply, or a rightward shift. A rightward shift in supply means that at every given price, the quantity supplied is higher.

The table below describes the market for teachers in a specific region. What is the equilibrium quantity of teachers in this labor market?

3200 teachers Labor market equilibrium occurs where the quantity of labor demanded is equal to the quantity of labor supplied. Thus, equilibrium in this labor market for teachers occurs when the hourly wage is $27.50 and 3,200 teachers are employed.

Identify the equilibrium quantity, q, and price, p, using the supply and demand schedules below.

Equilibrium occurs when quantity supplied equals quantity demanded. This occurs at q=30 and p=$15.

The table below describes the market for fast food employees. What is the equilibrium quantity of fast food employees?

Equilibrium occurs where quantity demanded is equal to quantity supplied, which is at $8.00 an hour with an equilibrium quantity is 75 thousand fast food employees.

Given the chart below, what is the equilibrium price and quantity? (market for bottled water)

Equilibrium price and quantity occurs where the supply and demand curves cross or where quantity supplied equals quantity demanded. In this case, q=60 thousand and p=$4 per gallon.

The minimum wage in Arizona is $10.50. This is higher than the federal minimum wage of $7.25. Which of the following is true? a. Businesses in Arizona cannot pay workers less than $10.50 per hour. b. Businesses in Arizona can pay workers wages between $7.25 $10.50 per hour. c. Businesses in Arizona can pay workers less than $10.50 per hour. d. all of the above.

a. Businesses in Arizona cannot pay workers less than $10.50 per hour.

Demand is different from quantity demanded because ___________________________________. a. "quantity demanded" can be expressed graphically while "demand" cannot b. "demand" is comprised of a series of quantity demanded at different prices, while "quantity demanded" is the number of units consumers demand at a specific price c. "demand" is a point on a supply-demand graph, and "quantity demanded" is the entire curve d. they are one and the same; "demand" is just economics shorthand for "quantity demanded"

b. "demand" is comprised of a series of quantity demanded at different prices, while "quantity demanded" is the number of units consumers demand at a specific price

The minimum wage is an example of ___________ . a. a price ceiling b. a price floor c. equilibrium d. a non-binding wage

b. a price floor

If price is above the equilibrium level, incentives built into the structure of supply and demand will create pressure for the price to __________. a. fall to zero b. fall toward equilibrium c. rise toward equilibrium d. skyrocket

b. fall toward equilibrium

The total number of units of a good or service consumers are willing to purchase at a given price is also called _______________. a. demand b. quantity demanded c. demand schedule d. consumer demand

b. quantity demanded

By definition, _______________ occurs when quantity supplied is greater than quantity demanded a. a shortage b. an equilibrium c. a surplus d. a market share

c. a surplus

While typically well-intended, price controls are often counterproductive because they deprive economic actors of __________. a. purchasing power b. agency c. information d. access to markets

c. information

Use the table below to choose the correct equilibrium price and quantity. a. quantity = 6, price = $14 b. quantity = 18, price = $14 c. quantity = 12, price = $10 d. quantity = 10, price = $12

c. quantity = 12, price = $10

What happens to the price and the quantity bought and sold in the market for olive oil if countries producing olive oil experience an olive shortage and a new study is released demonstrating the health benefits of olive oil? a. the equilibrium price of olive oil will fall b. the equilibrium quantity will rise c. the equilibrium price of olive oil will rise d. the equilibrium quantity will fall

c. the equilibrium price of olive oil will rise

______________ conveys information about the relative scarcity of a good, such as whether a shortage or a surplus exists. a. Supply b. Demand c. Elasticity d. Price

d. Price

Butter and margarine, two popular types of dairy spreads, are substitutes. Suppose that the price of butter drops by 20%. In the graph below, show how the market for margarine is impacted by this change by shifting the appropriate curve.

• demand decreases The demand for a good is positively related to the price of its substitute. Because butter and margarine are assumed to be substitutes, if the price of one goes down, then the demand for the other goes down. Since the price of butter decreased significant, people will substitute towards the relatively cheaper item (butter) and away from the relatively more expensive item (margarine). As a result, the quantity demanded of butter increases while the demand for margarine decreases or shifts to the left. A leftward shift in demand means that at any price, the quantity demanded will be lower than it was before.

Suppose that favorable weather conditions double the quantity of tobacco crops, causing a reduction in the price of tobacco. Tobacco is an input into the production of cigarettes. On the graph below, demonstrate the change in the supply of cigarettes by shifting the appropriate curve.

• supply increases The doubling of tobacco crops reduces their overall price to seller, which decreases production cost for cigarettes. This causes an increase or rightward shift in supply. A rightward shift in supply means that at every given price, the quantity supplied is higher.