chapters 1-4 homeworks

A company mines 360000 tons of coal per year in a rural county. The coal is worth ​$73 per ton. The average price for a​ 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is ​$220000. The average price for a​ similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 5 percent lower. Using comparative​ statics, what is the effect of mining on home prices in this​ county? Mining changes the price of a​ 2,000-square-foot home​ (with three​ bedrooms) by ​$________ (round two decimal places and use negative sign).

$-11000

You are considering renting a city apartment with​ 1,000 square feet for ​$1800 per month. The monthly rent on a​ larger, 1,500-square-foot city apartment is ​$2500. The marginal cost of renting an apartment with 500 additional square feet is ​$___ per square foot per month (round two decimal places).

$1.4

Suppose your total benefit from eating slices of pizza​ (value in​ dollars) is 10x-x^2, where x is the number of slices of pizza. Pizza is sold by the slice and costs ​$2 per​ slice, and so the total cost of pizza is 2x. Using optimization in​ levels, what is the optimal amount of pizza for you to​ eat? Your net benefit is maximized at __ slices of pizza.

4

Identify the cause and effect in the following​ examples: Lower infant mortality is ________ and an improvement in nutrition is ________. A surge in cocoa prices is ________ and a pest attack on the cocoa crop is ________.

an effect, the cause, an effect, the cause

Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following​ data: (Price of Crude Oil, GDP, # of New Mustaches Grown, Price of Gasoline) ​1) $ 80, 17.0, 3,000, $2.75 2) $90, 16.9, 2,000, $3.00 3) $100, 16.8, 5,000, $3.25 4) $110, 16.7, 1,000, $3.50 Your client has asked you to plot GDP and gasoline prices on a graph. There is a ________ correlation between GDP and gasoline prices.

negative

The statement that the United States has too many illegal immigrants is a ________ statement since it describes what people ________. The statement that the United States has a budget deficit that is in excess of $ 15 trillion is a ________ statement since it describes what people ________. The ethical implications of a hotly debated government policy would best be considered a​ _________.

normative, ought to do, positive, actually do, normative​ question, since it deals with a subjective issue based on personal preferences

You have been invited to play a​ 4-hour round of golf that has a value to you of ​$60. The total price to play the round of golf is ​$25. The net benefit of the round of golf is ​$___. Now assume that you have a job that pays you ​$8 per hour. Would you be optimizing to accept the invitation to play​ golf? To​ optimize, you should ________ golf.

$35, play

In which of the following areas will taking an economics course help benefit you throughout your​ life?

All of the above: It will help you analyze and predict human behavior in a variety of situations, it will give you the logic behind using​ cost-benefit analysis when evaluating decisions, it will instill the concept that what activity is given up by a decision plays an important role when making choices

Suppose your New Year resolution is to get back in shape. You are considering various ways of doing​ this: you can sign up for a gym​ membership, walk to​ work, take the stairs instead of the​ elevator, or watch your diet. How would you evaluate these options and choose an optimal​ one? When making your decision about which activity to​ choose, you should consider the monetary cost ________ the opportunity cost of the activities. The goal is to choose the option that offers the greatest ________ benefit.

Do a​ cost-benefit analysis to compare the alternatives, as well as, net

Which of the following is true regarding the concept of​ causation? Which of the following is not an example of​ causation?

It describes how one event can bring about change in another, driving without car insurance will lead to getting into an accident

A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus.​ However, you observe that some people still do not take the bus even after the price of a ticket fell. Is the model​ incorrect? How would you test this​ model?

No, because it predicts the outcome of increased bus ridership on average, You should run a natural experiment by analyzing bus ridership and price changes

There is a proverb​ "anything worth doing is worth doing​ well." Do you think an economist would agree with this​ proverb?

No, because the marginal cost of extra effort may be greater than the marginal benefit

Which of the following is not one of the five major factors that shifts the demand curve when it​ changes? When one of the five major factors​ changes, causing an increase in​ demand, the demand curve shifts ________. The graph to the right illustrates the demand for smartphones in a country. If people expect future price ​increases, how would the demand for a normal good be​ impacted? ​1.) Using the line drawing​ tool, depict how this increase will impact the demand for smartphones. Label the new curve ​'Upper D 2​'

Prices of inputs used to produce the good, rightward

What is meant by randomization in the context of an economic​ experiment?

Subjects are assigned by​ chance, rather than by​ choice, to a group

How does the sample size affect the validity of an empirical​ argument?

The larger the sample size the better

Which of the following is not one of the four major factors that shifts the supply curve when it​ changes? When one of the four major factors​ changes, causing an increase in​ supply, the supply curve shifts ________. The graph to the right illustrates the supply of smartphones in a country. If the number of sellers ​increases, how would the supply of smartphones be​ impacted?

The price of the good itself, rightward

Advances in wireless communication technology reduce the​ non-financial costs of long​ commutes: People who ride trains can get work​ done, and people who drive cars have more entertainment options. Given this​ information, which of the following will be an effect on the geographic area of​ cities? How will this result impact people as they decide how close to live to the city where they​ work? They will be ________.

The total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall, more willing to locate farther from the city

Some people choose to go to the dentist quite frequently. You compare the number of cavities for these people relative to those who do not go to the dentist at all. Using the concept of a natural​ experiment, which of the following statements is true about the​ scenario?

This is not a natural experiment

Since optimization is used to analyze​ people's choices and help them improve the outcomes of their​ choices, it's

both normative and positive

Comparing a set of feasible alternatives and picking the best one is an optimization process called​ _________. When deciding whether to install visible countdown timers for pedestrians at​ crosswalks, which of the following would be considered in the​ cost-benefit analysis?

cost-benefit analysis, the cost in terms of dollars of installing these new timers all over the city, the value of the lives lost by drivers who watch the countdown timers and try to make it through a light, the value of the​ pedestrians' lives saved by having the timers to assist in crossing the street, the higher maintenance bill associated with fixing these more complex signals when they break down

The three principles of economics include​ optimization, equilibrium, and empiricism. Empiricism describes a situation where ________. Optimization describes a situation where ________. Equilibrium describes a situation where ________.

economists use data to analyze what is happening in the world, people weigh costs and benefits when making a decision, no one would benefit from changing his or her behavior

For a market to be in​ equilibrium, three conditions must hold. The amount produced by sellers must be ________ the amount purchased by buyers. The costs of making a product must be ________ the final price at which the product sells. Buyers must place a value on the uses of the product that is ________ the cost of buying the product.

equal to, less than, greater than

As part of U.S. sugar​ policy, the government offers to buy raw sugar from domestic sugarcane mills at a price of 18.75 cents per pound. This government offer is made for as much raw sugar as the sugarcane mills produce. Any raw sugar purchased by the government is not sold in the domestic​ market, as this might cause raw sugar prices to fall. ​1.) Using the line drawing​ tool, depict the​ government's demand curve for sugar. Label your curve​ 'D'. ​(Be sure to have your demand curve touch the ​y-axis.​) Suppose conditions arise in the sugar market that would lead to a competitive equilibrium price that is below 18.75 cents per pound. In this​ situation, sugar mills will​ __________.

not sell to private buyers at this lower price and will sell to the government​ instead, which will drive up the domestic price until it reaches 18.75 cents per pound

Free riding occurs when ________ are out of sync with ________. Which of the following is subject to the​ free-rider problem? Which of the following is more susceptible to the​ free-rider problem: state parks or city - wide pest control​?

people's private benefits, the public interest, all of the above (neighborhood watch, public libraries, national security), use of city - wide pest control is more susceptible since even those who​ don't pay taxes still​ benefit, while state parks can charge for admission​, so that everyone who goes pays their share

In general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and colleges teach people valuable​ skills, and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is​ diligent, intelligent, and persevering. The ________ implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. The ________ implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates.

signaling argument, human capital argument

Optimization is the process that describes​ __________. Optimization in levels examines​ ___________, while optimization in differences analyzes​ ____________.

the choices that firms (businesses) make, total net benefits of​ alternatives; the change in net benefits

The opportunity cost of an activity is a measure of ________ when you do that activity. Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following​ order: going to​ class, sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. If you decide to go to​ class, then what do we know about the opportunity cost of your​ decision?

what is given up, the opportunity cost would be sleeping in​ late, since it was your​ next-best option

Suppose that you are on a date with an economics​ major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. You say that positive questions ask _______ and normative questions ask ________. Which of the following examples do you provide as a normative​ question? Which of the following do you provide as a positive​ question?

what is or what will be, what ought to be. Should welfare be repealed? How much is the national​ debt?

Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following​ data: (Price of Crude Oil, GPD, # of New Mustaches Grown, Price of Gasoline) 1) $80, 5000, 3000, $2.75 2) $90, 4700, 2000, $3.00 3) $100, 4500, 5000, $3.25 4) $110, 4300, 1000, $3.50 Your client has asked you to plot crude oil prices and gasoline prices on a graph. The​ cause, or independent​ variable, should be plotted on the ________ and the​ effect, or dependent​ variable, should be plotted on the ________. There is a ________ correlation between oil prices and gasoline prices.

x-axis, y-axis, positive

The mean and the median are closely related concepts. The median is the numerical value separating the higher half of your data from the lower half. You can find the median by arranging all of the observations from lowest value to highest value and picking the middle value​ (assuming you have an odd number of​ observations). Although the mean and median are closely​ related, the difference between the mean and the median is sometimes of interest. Suppose country A has five families. Their incomes are ​$9000​, ​$20000​, ​$30000​, ​$39000​, and ​$49000. Country​ A's median income is ​$________, and its mean income is $________ (Nearest dollar). Suppose country B also has five families. Their incomes are ​$9000​, ​$20000​, ​$30000​, ​$39000​, and ​$149000. Country​ B's median income is ​$ ________, and its mean income is $________ (Nearest dollar). Country __ has greater income inequality. Suppose you thought income inequality in the United States had increased over time. Based on your answers to this​ question, would you expect the ratio of the mean income in the United States to the median income has risen or​ fallen? Explain.

$30000, $29400, $30000, $49400, B, risen, because means change more with extreme values

You are a professor of economics at a university.​ You've been offered the position of serving as department​ head, which comes with an annual salary that is ​$8500 higher than your current salary.​ However, the position will require you to work 200 additional hours per year. Suppose the next best use of your time is spending it with your​ family, which has value of ​$20 per hour. What is the difference in the net benefit from becoming the department​ head? The change in net benefit is ​$______. To​ optimize, you ________ become a department head.

$4500, should

Scott loves to go to baseball​ games, especially home games of the Cincinnati Reds. All else​ equal, he likes to sit close to the field. He also likes to get to the stadium early to watch batting practice. The closer he parks to the stadium the more batting practice he is able to watch​ (the garages all open​ simultaneously). Find​ Scott's optimal seat type and parking garage using the information that follows. ​ (Location/Seat, Price, Scott's Value of View) 1) Diamond Seats ​$231 ​$137 2) Club Home $91 $132 3) Club Seating $81 $127 4) Scout Box $77 $120 5) Scout $67 $100 (Parking Location, Parking Fee, Arrival Time, Missed Batting Practice, Benefit of Arrival Time) 1) Westin parking garage $5 6:20 PM 60 min $0 2) Fount. Sqr Grd $10 ​5:50 PM 50 min $10 3) West river parking $17 5:25 PM 25 min $35 4) East river parking $24 5:10 PM 10 min $50 5) Under stadium parking $29 ​5:00 PM 0 min $70 Scott's optimal seat type is ________. Scott's optimal parking is ________.

Club Seating, Under stadium parking

Determine if the following statements better describe optimization in levels or optimization in differences. John is attempting to decide on a movie. He determines that the new Batman movie provides him with​ $5 more of a net benefit than the new Spiderman movie. Marcia finds that the net benefit of flying from Chicago to Honolulu on a​ non-stop United Airlines flight is​ $400, and the net benefit for the same trip flying on a​ one-stop American Airlines flight is​ $200. Nikki decided to take the first available parking space as she entered the student lot. She felt that the first available space had a​ $5 premium compared with all other possible spaces since she did not want to risk being late for her exam. Reagan determined that the net benefit of taking the combination of two lecture courses and an online lecture course was​ $100. The same three courses online gave her a net benefit of​ $80, and all three in a​ lecture-based format gave her a net benefit of​ $90.

Optimization in​ differences, since he is calculating the change in net benefits between alternatives, optimization in​ levels, since she is comparing the net benefits between alternatives, optimization in​ differences, since she is calculating the change in net benefits between alternatives, optimization in​ levels, since she is comparing the net benefits between alternatives

Land in​ Sonoma, California, can be used to either grow grapes for pinot noir wine or to grow Gravenstein apples. Given this​ information, what is the relationship between pinot noir wine and Gravenstein​ apples? If the demand for pinot noir suddenly shifts sharply to the​ right, we would expect to see ________ in the demand for land in​ Sonoma, which would ________ the equilibrium price of land. Assume that a sharp increase in demand for pinot noir leads to an increase in the price for land. Graph the impact of this price increase for land on the market for Gravenstein apples. ​1.) Using the​ 4-point curve drawing​ tool, depict the effect of the increased price of land in Sonoma on the market for Gravenstein apples. Draw either a shift in the supply or demand curve for Gravenstein apples. Label your curve. ​2.) Using the point drawing​ tool, plot the equilibrium point. Since both pinot noir wine and Gravenstein apples use the same land in​ Sonoma, California, a sharp increase in demand for pinot noir wine will result in a ________ price for Gravenstein apples and a ________ equilibrium quantity.

They share a common input, an increase, increase, higher, lower

As the text​ explains, it can sometimes be very difficult to sort out the direction of causality. Causation occurs when there is​ ____________. Demonstrate causation or correlation with the following​ examples: More ________ and ________ crime rates is likely to be ________. More ________ and ________ employment levels is likely to be ________. The length of​ women's skirts and stock market performance is likely to be ________.

a logical cause-and-effect relationship, police officers, lower, causation, economic growth, higher, causation, correlation

Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________. Policy decisions made by the government are analyzed by​ _________. A policy such as whether to increase the money supply would be studied under ________, since it deals with ________.

a small piece of the overall​ economy; the economy as a whole, both microeconomics and macroeconomics, macroeconomics, the economy as a whole

The definition of economics states that it is the study of how​ _________.

agents choose to allocate scarce resources and the impact of those choices on society

To say that economists use the scientific method means that they are using​ ___________. How do economists distinguish between models that work and those that​ don't?

an ongoing process to develop models of the world and then test and evaluate those models, they test their models against​ real-world data

You are taking two courses this​ semester, biology and chemistry. You have quizzes coming up in both classes. The table below shows your grade on each quiz for different numbers of hours studying for each quiz. For​ instance, the second row implies that one hour of studying for Chemistry will generate an expected grade of 61 on​ Chemistry, whereas one hour of studying for Biology will generate an expected grade of 65 on Biology. (Hours of Study, Chemistry, Biology) 1) 0, 55, 58 2) 1, 61, 65 3) 2, 65, 70 4) 3, 67, 73 Your goal is to maximize your average grade on the two quizzes. Use the idea of optimization in differences to decide how much time you would spend studying for each quiz if you had a total of​ 1, 2, or 3 hours to prepare for each exam. If you had 1​ hour, you should study ________. If you had 2​ hours, then you should study __ hour(s) for chemistry and __ hour(s) for biology. If you had 3​ hours, then you should study __ hour(s) for chemistry and __ hour(s) for biology.

biology, 1, 1, 1, 2

Lobsters are plentiful and easy to catch in August but scarce and difficult to catch in November. In​ addition, vacationers shift the demand for lobsters further to the right in August than in any other month. Given this​ information, we know that​ _________ is/are higher in August than in other months. On the right is a graph of the supply and demand for lobsters in August. Compare the equilibrium price and quantity of lobsters in August to the equilibrium price and quantity of lobsters in November. ​1.) Using the line drawing​ tool, depict the supply and demand for lobsters in November. Label the new demand curve ​'DN​' and label the new supply curve ​'SN​'. ​2.) Using the point drawing​ tool, depict the equilibrium price and quantity of lobsters in November. Label your point​ 'N'. When comparing the equilibriums in the lobster market for August and​ November, the equilibrium quantity is​ ______ in November than in​ August, while the equilibrium price is​ ______.

both supply and demand, ​​lower; higher,​ lower, or unchanged

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________.

cannot charge more than the market​ price; cannot pay less than the market price, lose all or almost all of its customers

Market demand is derived by​ __________. Does the shape of the market demand curve differ from the shape of an individual demand​ curve?

fixing the price and adding up the quantities that each buyer demands, no, they both tend to be​ downward-sloping curves

As a firm produces more of a​ good, the cost of producing each additional unit ________. This implies that the marginal cost of producing a good ________ as you make more of that good. The supply curve represents​ ___________.

increases, increases, the minimum price sellers are willing to accept to sell an extra unit of a good

The table given shows the demand for books. Price​ ($) Quantity of books demanded 1) 0 300 2) 10 200 3) 20 100 4) 30 0 Assume the law of demand is true. Also assume the information provided by the demand schedule is correct.​ However, make no other assumptions. Given this​ information, if the price of a book is ​$15​, the quantity demanded of books will be ________ the quantity of books demanded when the price is ​$5 per book.

less than

Suppose a new​ off-campus university apartment complex could rent its rooms on the open market for​ $900 a month. ​If, instead, the university chooses to cap the price of rooms to​ $500 a month for​ students, the result would be that​ ____________. Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most​ efficient?

quantity demanded would exceed the quantity supplied, resulting in a shortage, auctioning the rooms to the highest bidders

The Law of Demand states that as the price of a good​ increases, ceteris paribus​, the ________ decreases. This can be shown graphically with ________ demand curve or numerically in a table using a ________. The relationship that exists between these two variables can be described as _______.

quantity demanded, a downward-sloping, demand schedule, negatively related

You and your​ friend, Jim, have just moved out of your dorm and into a new apartment. Both of you decide that you need to get a couch. Jim thinks you should get a new one from a furniture store nearby. You feel​ that, given your​ budget, it is best to buy a used one. Your other options are to buy one online or get a couch​ custom-made at the same furniture store. How would you arrive at an optimal solution​ here? Assume that your opportunity cost of time is​ $5 per hour. You and Jim would need to consider​ ___________. Now suppose that you have a summer job that pays you​ $15 per hour. How would your analysis​ change? With a​ $15-per-hour summer​ job, ________ would increase.

the direct costs and the indirect opportunity cost of your time required to shop, the opportunity cost of your time

You are hired as a consultant for a local restaurant. It is considering whether to close at​ 9:00 p.m., stay open an extra hour​ (10:00 p.m.), or close earlier​ (8:00 p.m.). Based on wages and utility​ bills, the added cost​ (the marginal​ cost) of staying open for each additional hour is ​$135. If the additional revenue​ (the marginal​ revenue) during the last hour is ​$195​, the profit earned during the last hour of operation will be​ $____. If the additional revenue during the last hour is ​$75​, the profit earned during the last hour of operation will be​ $___. If the additional revenue​ (the marginal​ revenue) from staying open until 10.00 p.m. is ​$135​, the profit earned during the last hour of operation will be​ $___.

$60, $-60, $0

Consider the following data that show the quantity of coffee produced in Brazil from 2007 to 2011. Year Production (in tons) 2007 220 2008 230 2009 260 2010 290 2011 260 The mean quantity of coffee produced is ____ tons. ​Suppose, due to favorable​ weather, the crop in 2012 is 330 tons. In percentage​ terms, how much bigger is the 2012 crop over the​ 2007-2011 average? The 2012 crop is _____ percent larger (round two decimal places).

252, 30.95

The Law of Supply states that as the price of a good​ increases, ceteris paribus​, the ________ of that good increases. This can be shown graphically with ________ supply curve or numerically in a table using a ________. The relationship that exists between these two variables can be described as ________. ExxonMobil's Supply Schedule (Price ($/barrel), Quantity Supplied ​(billions of​ barrels) 1) ​$10, 0.0 2) $50, 1.1 3) $100, 1.5 4) $150, 1.7

quantity supplied, an upward-sloping, supply schedule, positively related

Suppose the price of plums increases and the demand for apples increases. You determine that these goods must be ________. A nasty fungus sharply reduces the supply of cranberries. What will happen to the equilibrium price and quantity of both cranberry juice and orange juice as a result of this​ event? ​1.) Using the line drawing​ tool, illustrate the impact of the reduced supply of cranberries on the market for cranberry juice by either drawing a new supply or demand curve. Label the new curve either ​'S2​' or ​'D2​'. ​2.) Using the point drawing​ tool, illustrate the new equilibrium in the cranberry juice market. Label this point​ 'A'. Given that orange juice and cranberry juice are substitutes and that the previous graph illustrated how the nasty fungus led to an increase in the price of cranberry juice​, graph the​ following: ​1.) Using the line drawing​ tool, illustrate the impact of the increase in the price of cranberry juice on the market for orange juice by either drawing a new supply or demand curve. Label the new curve either ​'S2​' or ​'D2​'. ​2.) Using the point drawing​ tool, illustrate the new equilibrium in the orange juice market. Label this point​ 'B'.

substitutes

Consider the market for coffee illustrated in the figure on the right. Show the effect of the drought on the coffee market. ​1.) Using the line drawing tool​, graph either a new coffee demand curve ​(D2​) or a new coffee supply curve ​(S2​) that shows the effect of the drought. Label your curve appropriately. ​2.) Using the point drawing tool​, indicate the new market equilibrium price and quantity. Label your point ​'e 2​.' Coffee and tea are likely _________ because an increase in the price of coffee ________ the demand for tea. What do you think the impact of this drought has been on the equilibrium price and quantity of​ tea? Draw a supply and demand diagram for the tea market to explain your answer. Consider the market for tea illustrated in the figure on the right. Show the effect of the drought on the tea market. ​1.) Using the line drawing tool​, graph either a new tea demand curve ​(D2​) or a new tea supply curve ​(S2​) that shows the effect of the drought. Label your curve appropriately. ​2.) Using the point drawing tool​, indicate the new market equilibrium price and quantity. Label your point ​'e 2​.'

substitutes, increases

Suppose that you allocate​ $20 each week for your entertainment budget. This money is spent on two​ items: either renting movies for​ $1 each at Redbox or downloading songs from iTunes at​ $1 each. Given this​ information, which of the following would represent your budget constraint for​ entertainment? Your budget constraint for entertainment illustrates the concept of ________ since as you increase your purchases of one item, you ________.

Amount spent on iTunes​ + Amount spent at Redbox​ = $20, trade-offs, must decrease your purchases of the other item

Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your​ client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response to his​ question? Your client becomes critical of your​ "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this​ criticism? He is still unconvinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by ________ with ________

No, the model is a simplified representation of reality, Economic models are meant to be approximations that predict what happens in most circumstances, testing its predictions, empirical data

Given the supply and demand curves on the​ right, when the price of the good is​ $20, we say that the market is in __________. At this​ price, we know that the quantity supplied is _________ the quantity demanded. Using the graph on the​ right, illustrate the impact of an increase in the price of the good from​ $20 per unit to​ $30 per​ unit, assuming everything else in the economy remains the same. ​1.) Using the point drawing​ tool, place a point at the quantity supplied when the price is​ $30 per unit. Label this point​ 'A'. ​2.) Using the point drawing​ tool, place a point at the quantity demanded when the price is​ $30 per unit. Label this point​ 'B'. If the only change in the market was that the price increased to​ $30, then we know that the quantity supplied will be _________ the quantity demanded, resulting in ________ , which is also known as ________. Suppose instead that the price of the good dropped below the competitive equilibrium price to a price of​ $15 per unit. If this were to​ occur, then the quantity supplied would be _________ the quantity demanded, resulting in _______, which is also known as ________.

competitive equilibrium, equal to, greater than, an excess supply, a surplus, less than, an excess demand, a shortage

Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on​ customers' gasoline purchasing habits when they notice price increases. You suggest that the team​ _____________. ​Debbie, a member of your​ team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey.​ Troy, another member of your​ team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase in the price of gas. Debbie's method is a ________ and Troy's method is a ________. Group A is the ________ and Group B is the ________.

design and execute an experiment, controlled experiment, natural experiment, treatment group, control group