Econ Hw 3

The relationship between quantity supplied and price is _____, and the relationship between quantity demanded and price is _____.

direct; inverse

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will

increase the quantity supplied of X and decrease the quantity demanded of X.

A fall in the price of milk, used in the production of ice cream, will

increase the supply of ice cream.

Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from

point 4 to point 1.

All of the following would affect the position of the supply curve for cranberries, except the

popularity of cranberry drinks.

Refer to the above diagram illustrating the market for corn. If the price in this market is fixed at $2 per bushel, then

sellers will quickly run out of corn that they bring to market.

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. A scalpers' market will exist if the event organizers set the official ticket price at

$20.

Refer to the above table. A surplus of 500 units will occur when the price is

$30 per unit.

Answer the question based on the following supply and demand schedules in units per week for a product. PriceQuantity DemandedQuantity Supplied$601004005014034040180280302202202026016010300100 If the government introduced a guaranteed price floor of $40 and agreed to purchase surplus output, then the government's total support payments to producers would be

$4,000 per week.

Price floors and ceiling prices both

interfere with the rationing function of prices.

The horizontal axis of a graph that shows a market demand curve indicates the

quantities which consumers will be willing and able to buy at various prices.

Answer the question on the basis of the given supply and demand data for wheat. Bushels Demanded Per MonthPrice Per BushelBushels Supplied Per Month45$57750473563686126167157 If price was initially $4 and free to fluctuate, we would expect the

quantity of wheat supplied to decline as a result of the subsequent price change.

The term "quantity demanded"

refers to the amount of a product that will be purchased at some specific price.

An effective price floor will

result in a product surplus.

According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because

the marginal benefit of additional units of the good now outweigh the marginal cost.

(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. The equilibrium quantity is

20.

Refer to the above graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after the introduction of technological improvements in bicycle production and successful publicity campaigns by the government on the virtues of bicycling to work?

5

Which of the diagrams illustrate(s) the effect of a decrease in incomes on the market for second-hand clothing?

A only

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market for wheat, when the cost of fertilizer decreases.

Graph C

In a competitive market illustrated by the diagram above, for a price floor to be effective and alter the market situation, it must be set

above $15.

Assuming conventional supply and demand curves, changes in the determinants of both supply and demand will generally

alter both equilibrium price and quantity.

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the

amount of oranges that will be available at various prices has declined.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market

an increase in demand has been more than offset by an increase in supply.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in demand may have been caused by

an increase in incomes if the product is a normal good.

In competitive markets, a surplus or shortage will

cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will

decrease D, decrease P, and decrease Q.

A decrease in supply, holding demand constant, will cause

higher prices and a smaller quantity sold.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Consumer expectations that the price of X will rise sharply in the future will

increase D, increase P, and increase Q.

(Consider This) Uber's dynamic pricing

keeps the market for rides in equilibrium by constantly adjusting fares to supply and demand conditions.

Refer to the diagram. A decrease in quantity demanded is depicted by a

move from point y to point x.

An "increase in the quantity supplied" suggests a

movement up along the supply curve.

If products C and D are close substitutes, an increase in the price of C will

shift the demand curve for D to the right.

Which of the following pairs are not considered to be complementary goods?

steel and cars

(Consider This) Dynamic pricing refers to

the ability to set equilibrium prices in real time in response to changing supply and demand conditions.

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event. The supply curve in this event-ticket market is vertical because

the organizers are selling a fixed number of tickets.

In moving along a demand curve, which of the following is not held constant?

the price of the product itself.

In moving along a supply curve, which of the following is not held constant?

the price of the product itself.

In constructing a demand curve for product X,

the prices of other goods are assumed constant.

In order to derive a market demand curve from individuals' demand curves, we add up the

various individuals' quantities demanded at each price level.