LC2: LearningCurve: Ch. 2: Supply and Demand

The inverse demand curve for M&B chardonnay (wine) is P = 200 − 0.1QD. Demand will be inelastic when the quantity is:

1,500. At any quantity above 1,000, the price elasticity of demand is greater than -1.

The inverse supply curve for M&B chardonnay (wine) is P = 200 + 0.2QS. Supply will be elastic when the quantity is all of the following EXCEPT:

All of the answers are correct.

The inverse supply curve for M&B chardonnay (wine) is P = 200 + 0.2QS. Supply will be inelastic when the quantity is:

None of the answers is correct. For this equation, supply is elastic at every quantity.

Demand is QD = 5,000 − 4P and supply is given by QS = 7P − 500. The equilibrium price and quantity are:

Q = 3,000, P = 500. Set the two equations equal to one another, solve for P, then insert P into one of the two equations and solve for Q. At the equilibrium price, quantity supplied equals quantity demanded.

A store sells three different brands of paper towels. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button.

Substitutes.

A company produces a flying car; however, it is so expensive that no one is willing to buy it. The price they are charging is:

a price greater than or equal to the demand choke price. The choke price is the lowest price for which there will be no demand for a product. Any higher price will also have zero demand.

The Beartown grocery store has been out of stock of a popular brand of chocolate since the manufacturer lowered the price. This is an example of _____.

a shortage A shortage occurs when quantity demanded exceeds quantity supplied at the existing price.

A shoe company decreases their prices after finding a way to make production less expensive. If nothing else changes, this will cause a(n) _____ in _____.

an increase; quantity demanded

Increased interest in running causes an increase in the purchase of running shoes. Many of those buying running shoes also buy socks and running shorts. The socks and running shorts are _____ to the running shoes.

complements Complements are items that are often purchased and used together; a hot dog and hot dog bun is one example.

Increasing temperatures lead to an increase in the consumption of water and soda. Many of those purchasing water and soda also buy plastic cups with the drinks. The plastic cups are _____ to the drinks.

complements Complements are items that are often purchased and used together; a hot dog and hot dog bun is one example.

If an increase in the price of good A causes demand for good B to decrease, we call A and B:

complements.

Apples and Opals Boutique has stocked a large number of feather fans. Very few of the fans sell. This is an example of:

excess supply. Any time a price is higher than the equilibrium point, supply will exceed demand.

A luxury good is a good:

for which consumption rises faster than income rises.

The Screaming Eagle Winery in Napa Valley, California, sells ultra-premium cabernet sauvignon. By law, all grapes used to make a wine must be harvested in the year printed on the label. The supply of Screaming Eagle's 2000 cabernet sauvignon is probably _____.

inelastic

The demand for food is probably:

inelastic. A person cannot live without food, so they will demand a certain minimum amount of food regardless of price.

Economists describe the equation P = 5 − 0.01Q as a(n):

inverse demand curve.

A good whose income elasticity of demand is greater than 1.0 is sometimes called a(n) _____ good.

luxury

Marianka is a baker. Her Christmas bread is especially popular during the Christmas season, which causes her income to increase significantly, albeit seasonally. Marianka will probably purchase more _____ during December and January.

normal goods The demand for normal goods moves in the same direction as the change in income.

Two exercise centers are opened on the same block. Fierce competition ensues, and membership prices are very competitive. Membership at these exercise centers is an example of:

substitutes. Substitutes may be of lower, equal, or higher quality, but they serve the same function as other products. Challenge this Question

To economists, production technology is:

the processes used to grow, distribute, and sell a good.