ECON 2010 - QUIZ 3

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.i. Change in market price:

Movement along the supply curve

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png f. Does this refute the law of demand:

No .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) e. A decline in the price of large tires used for semi trucks and earth-hauling rigs, a substitute in production. (with no change in the price of auto tires):

Increase .

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? a. Small automobiles become more fashionable:

Increase .

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? b. The price of large automobiles rises (with the price of small autos remaining the same):

Increase .

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? c. Income declines and small autos are an inferior good:

Increase .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) a. A technological advance in the methods of producing tires:

Increase .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) d. The expectation that the equilibrium price of auto tires will be lower in the future than currently:

Increase .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) g. The granting of a 50-cent-per-unit subsidy for each auto tire produced:

Increase .

Refer to the table below. Fill in the surplus-shortage column (gray cells). Instructions: Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. https://imageshack.com/i/pmIadXu5p a. What is the equilibrium price in this market? At what price is there neither a shortage nor a surplus?

$4.00 ,$4.00 .

https://imageshack.com/i/pnTN9Fkpp e. How big a surplus or shortage results if the price is 30 cents lower than the equilibrium price?

10 thousand bushels.

https://imageshack.com/i/pnTN9Fkpp d. How big a surplus or shortage results if the price is 60 cents higher than the equilibrium price?

14 thousand bushels.

Given the following diagram, indicate whether these changes represent a change in supply or a change in quantity supplied. http://imageshack.com/a/img921/9157/Q3TSWa.jpg A change from point A to point B =

A change in quantity supplied

Given the following diagram, indicate whether these changes represent a change in supply or a change in quantity supplied. A change from point A to point C =

A change in supply

The figure below shows the supply curve for tennis balls, S1, for Drop Volley Tennis, a producer of tennis equipment. If production costs were to increase, the quantities supplied at each price would be as shown by the third column of the table ("S2 Quantity Supplied"). http://imageshack.com/a/img921/3305/6a5WiW.png d. Did the increase in production costs cause a "decrease in supply" or a "decrease in quantity supplied"?

A decrease in supply.

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.ii. Change in factor productivity:

A shift in the supply curve

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.iii. Change in producer expectations:

A shift in the supply curve

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.iv. Change in the price of other goods:

A shift in the supply curve

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.v. Change in technology:

A shift in the supply curve

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? e. The price of gasoline substantially drops:

Cannot be determined .

You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. Income Price of other goods Technology Tastes and preferences Resource prices Number of producers

Price of other goods Technology Resource prices Number of producers

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? b. Demand decreases and supply is constant.

Price: Decreases Quantity: Decreases

There is a surplus of tomatoes in the market. This implies that:

The current price is set above the equilibrium level

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the following? b. Hide prices:

increase

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png c. This change in price results in ___ in quantity demanded along the D2 demand curve.

an increase

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the following? a. The supply of cattle hides:

decrease

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the following? c. The supply of leather goods:

decrease

In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the following? d. The price of leather goods:

increase

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png e. The new equilibrium has a __ and a __ when compared to the original equilibrium.

lower price, lower quantity

Which of the following is consistent with the law of demand?

An increase in the price of hamburgers causes buyers to buy fewer hamburgers

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.vi. Change in resource prices:

A shift in the supply curve

Indicate whether a change in the value of each of the following determinants of supply leads to a movement along the supply curve or a shift in the supply curve.vii. Change in taxes:

A shift in the supply curve

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png g. Why:

Because there was a change in demand .

What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500? d. Consumers anticipate that the price of small autos will greatly come down in the near future:

Decrease .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) b. A decline in the number of firms in the tire industry:

Decrease .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) c. An increase in the prices of rubber used in the production of tires:

Decrease .

What effect will each of the following have on the supply of auto tires? (Keeping all else constant) f. The levying of a per-unit tax on each auto tire sold:

Decrease .

The two market diagrams below show the market for public and private colleges. How will an increase in state subsidies to public colleges affect the market for public and private colleges? http://imageshack.com/a/img922/3452/5Ih0ow.png In private colleges: In public colleges:

Demand will shift to the left (down), Supply will shift to the right (down) .

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? c. Supply increases and demand is constant.

Price: Decreases Quantity: Increases

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? f. Supply increases and demand decreases.

Price: Decreases Quantity: Indeterminate

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? a. Supply decreases and demand is constant.

Price: Increases Quantity Decreases

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? e. Demand increases and supply is constant.

Price: Increases Quantity: Increases

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? g. Demand increases and supply decreases.

Price: Increases Quantity: Indeterminate

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? h. Demand decreases and supply decreases.

Price: Indeterminate Quantity: Decreases

How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity increase or decrease, or are the answers indeterminate because they depend on the magnitudes of the shifts? d. Demand increases and supply increases.

Price: Indeterminate Quantity: Increases

For each stock in the stock market, the number of shares sold daily equals the number of shares purchased. That is, the quantity of each firm's shares demanded equals the quantity supplied. So, if this equality always occurs, why do the prices of stock shares ever change?

Prices change in reaction to a mismatch between Qd and Qs.

https://imageshack.com/i/pnTN9Fkpp What if the price is $4.90?

There is a surplus of 18 thousand bushels.

In which of these two statements are the terms "supply" and "demand" used correctly? A. "In the corn market, demand often exceeds supply and supply sometimes exceeds demand." B. "The price of corn rises and falls in response to changes in supply and demand."

Statement B.

Other things being equal, the law of demand suggests that as:

The price of iPads decreases, the quantity demanded will increase

https://imageshack.com/i/pnTN9Fkpp c. How big is the surplus or shortage at $3.40?

There is a shortage of 23 thousand bushels.

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png d. This change in price results in __ in quantity supplied.

a decrease

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png a. A decrease in demand from D1 to D2 results in

excess supply .

Critically evaluate: "In comparing the two equilibrium positions in the diagram below, I note that a smaller amount is actually demanded at a lower price. This refutes the law of demand." http://imageshack.com/a/img922/7599/19d8Fc.png b. This causes the price to

fall .

The figure below shows the supply curve for tennis balls, S1, for Drop Volley Tennis, a producer of tennis equipment. If production costs were to increase, the quantities supplied at each price would be as shown by the third column of the table ("S2 Quantity Supplied"). http://imageshack.com/a/img921/3305/6a5WiW.png a. Use the figure to fill in the quantity supplied given the supply curve S1 for each price in the table below (second column, gray shaded cells). Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

http://imageshack.com/a/img921/1041/CjRchQ.png

The figure below shows the supply curve for tennis balls, S1, for Drop Volley Tennis, a producer of tennis equipment. If production costs were to increase, the quantities supplied at each price would be as shown by the third column of the table ("S2 Quantity Supplied"). http://imageshack.com/a/img921/3305/6a5WiW.png b. Use that data to draw supply curve S2 on the graph below. Instructions: On the graph below, use your mouse to click and drag the supply curve 'S1' as necessary, or you may move the individual points.

http://imageshack.com/a/img921/1041/CjRchQ.png http://imageshack.com/a/img924/6444/TteRdp.png

The figure below shows the supply curve for tennis balls, S1, for Drop Volley Tennis, a producer of tennis equipment. If production costs were to increase, the quantities supplied at each price would be as shown by the third column of the table ("S2 Quantity Supplied"). http://imageshack.com/a/img921/3305/6a5WiW.png c. In the fourth column (gray shaded cells) of the table in part a, enter the amount by which the quantity supplied at each price changes due to the increase in product costs. (Use positive numbers for increases and negative numbers for decreases.)

http://imagizer.imageshack.us/a/img921/1041/CjRchQ.png

Refer to the table below. https://imageshack.com/i/pmIadXu5p b. Graph the demand for wheat and the supply of wheat. Be sure to locate the equilibrium price and quantity. Instructions: Use the tools provided 'Supply' and 'Demand' to draw the demand and supply curves using the data in the table. Include each price-quantity combination. Each line should contain 6 reference points. Then use the tool provided 'Eq' to identify the equilibrium price and quantity.

https://imageshack.com/i/pnTN9Fkpp