Sapling : Chapters 2-4
Below is a supply and demand curve for spaghetti. Assume that the price of rice increases and the price of meatballs decreases. Shift the appropriate curve(s) to show how this news will affect the supply and/or demand of spaghetti.
A substitute is a good that is seen as relatively equal to another good in consumption. (e.g., Coke and Pepsi.) Rice is a staple grain for many people and viewed as an alternative to pasta. When the price of rice increases, more people will want to buy spaghetti as it is a cheaper alternative, all else being equal, which will shift the demand curve to the right. A complement is a good that is often consumed with another good. Spaghetti and meatballs is a common dish, the two goods are often served toghether. A decrease in the price of meatballs would likely increase the demand for meatballs and the demand for spaghetti. This will also shift the demand curve to the right. The supply curve for spaghetti is unaffected as this news does not impact the process of production or the price of its inputs.
Below shows the graph of a labor market. Click on the minimum wage line and drag it to a point where it would become a binding minimum wage in this market.
Minimum wage is at 6
The following table shows information on the conditions of demand and supply for online music files, where the quantity of online music is measured in thousands of mp3 files. price quantity demanded quantity supplied $0.45 385 235 $0.65 325 255 $0.85 285 285 $1.05 235 355
What are the equilibrium price and quantity? Equilibrium quantity: 285 Equilibrium price: $0.85
The cost of lithium-ion batteries, an input into the production of electric vehicles, has been dropping more steeply than expected. The figure below shows the market for electric vehicles. Move the supply and/or demand curves to reflect the effect that a reduction in the price of lithium-ion batteries will have on the market of electric vehicles. Also select the end result of equilibrium price and quantity.
Equilibrium price: decreases Equilibrium quantity: increases
Suppose that Paulie and Vinny each can produce ice cream or t-shirts. The table below shows the quantity of each good that Paulie and Vinny each can produce in one hour, respectively, if they devote all of their time and effort into making the good. Ice Cream (cups) T-shirts (quantity) Paulie 5.00 20.00 Vinny 8.00 15.00
1. What is Paulie's opportunity cost of producing a cup of ice cream? (Round to two decimal places.) Answer: 4 t-shirts 2. What is Vinny's opportunity cost of producing a t-shirt? (Round to two decimal places.) Answer: 0.533 cups of ice cream 3. Paulie has a comparative advantage in _____ and Vinny has a comparative advantage in ____. Answer: t-shirts; ice cream
Below is the supply schedule for ink cartridges. The current price of ink (per cartridge) is $20. The orange point on the graph indicates how many cartridges that suppliers are willing to supply at $20/cartridge. Imagine that the price of cartridges increases to $24. Shift the curve and/or move the point to demonstrate what happens in terms of supply if the price increases to $24. Price of Ink (per cartridge) Quantity of ink cart supplied $14 2 $16 3 $20 5 $24 7 $26 8
Answer: supply is at 24,7 A change in the price of a good causes movement along the supply curve, not a shift in the supply curve. In this case, the suppliers were originally supplying 5 billion cartridges at $20, now they will supply 7 billion cartridges at $24. A shift in the supply curve, or change in quantity supplied at any price, would require an event such as an increase or decrease in the number of ink cartridge producers.
Alaskan king crab is one of the most prized shellfish. Suppose that, to protect their numbers, the Alaskan government allows only 15 million pounds of crab to be caught during the fishing season so that the Alaskan king crab population remains at an environmentally sustainable level. Below are supply and demand curves for Alaskan king crab. Quota Rent= Point A to B Quota= Point B to E Deadweight loss = yellow shaded area
Before the government imposes its regulations, what is the price per pound of crab? Answer: $3.50 What is the demand price after the quota? Answer: $4.00 What is the quota rent for Alaskan king crab? Answer: $1
For each example listed below, decide if the good is a normal good or an inferior good. Make sure you answer from the perspective of the individual(s) doing the buying or consuming.
Billy's mom increases his weekly allowance by $5. As a result, Billy increases the number of apps he downloads on his smartphone. Smartphone apps are a(n): NORMAL GOOD Susan gets a 15 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are a(n): INFERIOR GOOD Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is a(n): INFERIOR GOOD Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are a(n): NORMAL GOOD Professor Jones is an oceanographer. She finds that college students eat less sushi when their incomes rise. Sushi is a(n): INFERIOR GOOD
Suppose the following represents the Canadian production possibilities frontier for two of its most important exports: maple syrup (in millions) and tree logs (in millions). Please choose the best answer for each question.
Point H... is possible, but not efficient. Point M... is possible and efficient. Point Y... is not possible and is unobtainable, unless international trade occurs.