Macroeconomics 4.5 Studyguide

1) The following equations represent the demand and supply for bird feeders. QD = 35 - P QS = -5 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders? A) P = $10; Q = 25 thousand B) P = $35; Q = 20 thousand C) P = $20; Q = 20 thousand D) P = $5; Q = 30 thousand

A

12) Refer to Table 4-6.ȱȱThe equations above describe the demand and supply for Aunt Maudȇs Premium Hand Lotion.ȱȱThe equilibrium price and quantity for Aunt Maudȇs lotion are $20 and 30 thousand units.ȱȱWhat is the value of economic surplus in this market? A) $600 thousand B) $1,050 thousand C) $1,500 thousand D) $2,100 thousand

A

7) If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation A) P = 0.5QS + 1.5. B) P = 2QS + 6. C) P = 2QS - 6. D) P = 1.5 - 0.5QS.

A

demand supply P = 50 - QD P = 10 + 1/3 QS QD = 50 - P QS = 3P - 30 9) Refer to Table 4-6.ȱȱThe equations above describe the demand and supply for Aunt Maudȇs Premium Hand Lotion. What are the equilibrium price and quantity (in thousands) for Aunt Maudȇs Lotion? A) $20 and 30 thousand B) $30 and 20 thousand C) $60 and 30 thousand D) $20 and 60 thousand

A

8) If the quantity of jelly beans supplied is represented by the equation QS = -20 +4P then the corresponding price of jelly beans is represented by the equation A) P = 0.5QS + 80. B) P = 0.25QS + 5. C) P = 4QS - 80. D) P = 2.5 - 4QS.

B

18) The demand and supply equations for the peach market are: Demand:ȱȱP = 24 - 0.5Q Supply:ȱȱȱȱȱP = -6 + 2.5Q where P = price per bushel, and Q = quantity (in thousands). a. Calculate the equilibrium price and quantity. b. Suppose the government guaranteed producers a price of $24 per bushel. What would be the effect on quantity supplied? Provide a numerical value. c. By how much would the $24 price change the quantity of peaches demanded? Provide a numerical value. d. Would there be a shortage or surplus of peaches? e. What is the size of this shortage or surplus?ȱȱProvide a numerical value

Answer: a. Quantity = 10 thousand bushels: {24 - 0.5Q = -6 + 2.5Q;ȱȱ30 = 3Q;ȱȱQ = 10} Price = $19: {P = 24 - 0.5(10);ȱȱȱP = 24 - 5;ȱȱP = $19} b. Quantity supplied would increase to 12 thousand bushels:ȱȱ{24 = -6 + 2.5Q;ȱȱ30 = 2.5Q; Q = 12} c. Quantity demanded would fall to zero bushels:ȱȱ{24 = 24 - 0.5Q;ȱȱ0 = -0.5Q; Q = 0} d. There would be a surplus. e. Surplus = 12,000 - 0 = 12 thousand bushels.

17) You are given the following market data for Venus automobiles in Saturnia. Demand: P = 35,000 - 0.5Q Supply:ȱȱȱȱP = 8,000 + 0.25Q where P = Price and Q = Quantity. a. Calculate the equilibrium price and quantity. b. Calculate the consumer surplus in this market. c. Calculate the producer surplus in this market.

Answer: a. Quantity = 36,000: {35,000 - 0.5Q = 8,000 + 0.25Q.; 27,000 = 0.75Q;ȱȱQ = 36,000.} Price = $17,000: {P = 35,000 - 0.5(36,000);ȱȱP = 35,000 - 18,000;ȱȱP = $17,000.} b. Consumer surplus = (0.5)($35,000 - $17,000) × 36,000 = $324 million c. Producer Surplus = (0.5)(17,000 - 8,000) × 36,000 = $162 million

5) If the quantity of tacos demanded is represented by the equation QD = 20 - 0.5P then the corresponding price of tacos is represented by the equation A) P = 0.5QD + 10. B) P = 40 - 2QD. C) P = 10 - 2QD. D) P = QD + 40.

B

6) If the quantity of hearing aids demanded is represented by the equation QD = 40 - P then the corresponding price of hearing aids is represented by the equation A) P = 0.5QD + 20. B) P = 40 - QD. C) P = 0.25 - 4QD. D) P = QD + 40.

B

demand supply P = 50 - QD P = 10 + 1/3 QS QD = 50 - P QS = 3P - 30 10) Refer to Table 4-6.ȱȱThe equations above describe the demand and supply for Aunt Maudȇs Premium Hand Lotion.ȱȱThe equilibrium price and quantity for Aunt Maudȇs lotion are $20 and 30 thousand units.ȱȱWhat is the value of consumer surplus? A) $300 thousand B) $450 thousand C) $900 thousand D) $1,500 thousand

B

demand supply P = 60 - 2QD P = 15 + QS QD = 30 - 0.5P QS = P - 15 15) Refer to Table 4-7.ȱȱThe equations above describe the demand and supply for Paulineȇs Pickled Pomegranates. The equilibrium price and quantity for Paulineȇs Pickled Pomegranates are $30 and 15 thousand units.ȱȱWhat is the value of producer surplus? A) $50 thousand B) $112.5 thousand C) $225 thousand D) $337.5 thousand

B

3) If the price of garlic is represented by equation P = 25 - QD, then the corresponding quantity of garlic demanded is represented by the equation A) QD = P - 25. B) QD = P + 25. C) QD = 25 - P. D) QD = -25 + P.

C

4) If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation A) QD = 20 - .5P. B) QD = 40 - P. C) QD = 80 - 2P. D) QD = -20 + P.

C

demand supply P = 50 - QD P = 10 + 1/3 QS QD = 50 - P QS = 3P - 30 11) Refer to Table 4-6.ȱȱThe equations above describe the demand and supply for Aunt Maudȇs Premium Hand Lotion.ȱȱThe equilibrium price and quantity for Aunt Maudȇs lotion are $20 and 30 thousand units.ȱȱWhat is the value of producer surplus? A) $600 thousand B) $300 thousand C) $150 thousand D) $30 thousand

C

demand supply P = 60 - 2QD P = 15 + QS QD = 30 - 0.5P QS = P - 15 13) Refer to Table 4-7.ȱȱThe equations above describe the demand and supply for Paulineȇs Pickled Pomegranates. What are the equilibrium price and quantity (in thousands) for Paulineȇs Pickled Pomegranates? A) $60 and 20 thousand B) $15 and 45 thousand C) $30 and 15 thousand D) $20 and 10 thousand

C

demand supply P = 60 - 2QD P = 15 + QS QD = 30 - 0.5P QS = P - 15 14) Refer to Table 4-7.ȱȱThe equations above describe the demand and supply for Paulineȇs Pickled Pomegranates. The equilibrium price and quantity for Paulineȇs Pickled Pomegranates are $30 and 15 thousand units.ȱȱWhat is the value of consumer surplus? A) $50 thousand B) $112.5 thousand C) $225 thousand D) $337.5 thousand

C

2) The following equations represent the demand and supply for kumquats. QD = 60 - 3P QS = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats? A) P = $5; Q = 20 thousand B) P = $30; Q = 5 thousand C) P = $20; Q = 10 thousand D) P = $10; Q = 30 thousand

D

demand supply P = 60 - 2QD P = 15 + QS QD = 30 - 0.5P QS = P - 15 16) Refer to Table 4-7.ȱȱThe equations above describe the demand and supply for Paulineȇs Pickled Pomegranates. The equilibrium price and quantity for Paulineȇs Pickled Pomegranates are $30 and 15 thousand units.ȱȱWhat is the value of economic surplus in this market? A) $50 thousand B) $112.5 thousand C) $225 thousand D) $337.5 thousand

D