Econ 201 Chapter 4 learning curve
In the late 1990s, Beanie Babies became very popular collectible toys. Many buyers spent a great deal of time visiting multiple retail locations to find specific Beanie Babies that retailers had a very hard time keeping in stock. What probably describes the eBay prices for Beanie Babies during that time?
The eBay prices were higher than the retail prices because the retail prices led to shortages of Beanie Babies.
Suppose that when good Z is free, buyers will demand 200 units of it, but the quantity demanded falls by 5 units for every $2 increase in the price. If the price is $24 and the quantity supplied is 125 units:
the price will eventually rise above $24. The quantity demanded is 200 − (5 × ($24 ÷ $2)) = 140. The difference in quantity demanded and quantity supplied is 140 − 125 = 15. The shortage should lead to price increases until the shortage is eliminated.
The financial crisis of 2007-2010 had a huge impact on the U.S. housing market, causing the number of uninhabited houses to be far greater than the number of people able and willing to buy a house. What probably happened in the housing market?
Housing prices fell. Housing prices dropped over 25% between 2006 and 2010. This surplus of houses led to decreases in housing prices.
As consumer income decreases, the equilibrium price of a normal good _____and the equilibrium quantity of a normal good decreases.
Decreases
If, in this market, demand is represented by curve D1, supply is represented by curve S2, and the price is P1:
there will be a shortage in this market. A shortage (quantity demanded greater than quantity supplied) will cause the price to rise over time to the equilibrium price of P3.
In what year was OPEC, the Organization of the Petroleum Exporting Countries, formed
1960
Which statement accurately describes the competition that determines the price of a good?
Buyers compete with buyers, driving the price of a good up to the equilibrium price.
Carla participates in a supply and demand experiment in her economics course. What can she expect the laboratory experiment to reveal about the supply and demand model?
It successfully predicts real-life behavior.
Jan is a buyer in Vernon Smith's classroom experiment of the market model. Which does she know?
her own willingness to buy The buyer does know her own willingness to buy.
What does a decrease in supply result in?
a lower equilibrium quantity A decrease in supply is represented by a leftward shift of the supply curve.
Which illustrates an increase in quantity demanded?
a movement up along a fixed demand curve
Holding supply constant, if the demand curve shifts to the right, there will be a(n) _____in equilibrium price and a(n) _____ in equilibrium quantity.
increase; increase This is an increase in demand, which also causes an increase in the equilibrium quantity supplied.