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ECON 341 HW 2
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Terms in this set (64)
If the price of a complement for tires decreases, all else equal,
demand for tires will increase.
The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT
the price of the good.
Which of the following would DECREASE the demand for tennis balls?
A decrease in average household income when tennis balls are a normal good
If input prices increase, all else equal,
supply will decrease.
Which of the following would increase the supply of corn?
a decrease in the price of wheat
When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in
the quantity of this wine demanded.
Which of the following will cause a change in quantity supplied?
a change in the market price of the good
When the average price of videocassette recorders (VCRs) falls, the result is
an increase in the quantity of VCRs demanded.
Use the following general linear demand relation:
Qd = 680 - 9P + 0.006M - 4PR
where M is income and PR is the price of a related good, R.From this relation it is apparent that the good is:
both c and d
Use the following general linear demand relation:
Qd = 680 - 9P + 0.006M - 4PR
where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20, the demand function is
Qd = 690 - 9P.
Use the following general linear demand relation:
Qd = 680 - 9P + 0.006M - 4PR
where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P , equilibrium price and quantity are, respectively,
P = $55 and Q = 195.
Use the following general linear demand relation:
Qd = 680 - 9P + 0.006M - 4PR
where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is QS = 30 + 3P , then, when the price of the good is $60,
there is a surplus of 60 units of the good.
Use the following general linear demand relation:
Qd = 680 - 9P + 0.006M - 4PR
where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P , then, when the price of the good is $40,
there is a shortage of 180 units of the good.
Use the following demand and supply functions:
Demand: Qd = 50 - 4P
Supply: Qs = 20 + 2P
Equilibrium price and output are
none of the above
Use the following demand and supply functions:
Demand: Qd = 50 - 4P
Supply: Qs = 20 + 2P
If the price is $10, there is a
surplus of 30 units.
Use the following demand and supply functions:
Demand: Qd = 50 - 4P
Supply: Qs = 20 + 2P
If the price is $2, there is a
shortage of 18 units.
If price is $16 there is(Supply Demand Curve)
a surplus of 250 units.
If the price is $16, the resulting(Supply Demand Curve)
surplus will lead to a fall in price.
If price is $8,
(supply demand curve)
there will be a shortage of 150 units.
Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen?
The demand for salad dressing will decrease.
Scientists have developed a bacterium they believe will lower the freezing point of agricultural products. This innovation could save farmers $1 billion a year in crops now lost to frost damage. If this technology becomes widely used, what will happen to the equilibrium price and quantity in, for example, the potato market?
price will decrease, quantity will increase
Suppose that the market for engagement rings is in equilibrium. Then political unrest in South Africa shuts down the diamond mines there. South Africa is the world's primary supplier of diamonds. What will happen?
The equilibrium quantity of engagement rings will decrease.
So long as the actual market price exceeds the equilibrium market price, there will be
downward pressure on the price.
In which of the following cases will the effect on equilibrium output be indeterminate (i.e., depend on the magnitudes of the shifts in supply and demand)?
Demand decreases and supply increases
Increases in the wage rates of coal miners and decreases in the price of natural gas would cause the price of coal to
rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of coal would fall.
In the figure, the equilibrium price and quantity are
P = $6 and Q = 300.
Let demand remain constant at D; an increase in wages causes firms to be willing and able to sell 150 fewer units at each price than they were before the wage increase.
The new equilibrium price and quantity will be P = $7 and Q = 250.
Let supply remain constant at S; a decrease in income causes consumers to be willing and able to purchase 150 fewer units at each price than they were previously.
The new equilibrium price and quantity will be P = $5 and Q = 200.
Let supply remain constant at S; an increase in the price of a substitute good causes consumers to be willing and able to buy 150 more units of the good at each price in the list than they were when demand was D. Which of the following statements is (are) true?
both a and d
Use the following demand and supply functions:
Demand: Qd = 900 - 60P
Supply: Qs = -200 + 50P
Equilibrium price and output are
P = $10 and Q = 300.
Use the following demand and supply functions:
Demand: Qd = 900 - 60P
Supply: Qs = -200 + 50P
If the price is currently $11, there is a
surplus of 110 units.
Use the following demand and supply functions:
Demand: Qd = 900 - 60P
Supply: Qs = - 200 + 50P
Let supply remain constant; an increase in income causes consumers to be willing and able to buy 220 more units at each price than they were previously. The new equilibrium price and quantity are
P = $12 and Q = 400.
A "puppy boom" and an increase in the price of horse meat would cause the market price of dog food to
rise and the market output to rise, fall, or remain unchanged depending on the magnitude of the changes.
With a given supply curve, a decrease in demand leads to
a decrease in equilibrium price and a decrease in equilibrium quantity.
Suppose that more people want Orange Bowl tickets than the number of tickets available. Which of the following statements is correct?
both a and c
Use the following general linear demand relation:
Qd = 100 - 5P +0.004 M -5PR
where P is the price of good X, M is income, and PR is the price of a related good, R.What is the demand function when M = $50,000 and PR = $10?
none of the above
Use the following general linear demand relation:
Qd = 100 - 5P + 0.004M - 5PR
where P is the price of good X, M is income, and PR is the price of a related good, R.From the demand function it is apparent that related good R is
a complement for good X.
Use the following general linear demand relation:
Qd = 100 - 5P + 0.004M - 5PR
where P is the price of good X, M is income, and PR is the price of a related good, R. If M = $50,000 and PR= $10 and the supply function is Qs = 150 + 5P, market price and output are, respectively,
P = $10 and Q = 200.
Use the following general linear demand relation:
Qd = 100 - 5P + 0.004M - 5PR
where P is the price of good X, M is income, and PR is the price of a related good, R. If income increases to $100,000 and the price of the related good is now $20, what is the demand function?
Qd = 400 - 5P
Use the following general linear demand relation:
Qd = 100 - 5P + 0.004M - 5PR
where P is the price of good X, M is income, and PR is the price of a related good, R. Income is $100,000, the price of the related good is $20, and the supply function is Qs = 150 + 5P. What is the equilibrium price?
$25
Use the following general linear demand relation:
Qd = 100 - 5P +0.004M - 5PR
where P is the price of good X, M is income, and PR is the price of a related good, R. Income is $80,000, and the price of the related good is $40. Also let consumers' tastes change so that consumers now demand 100 more units at each price. When the price of the good is $50, how many units of the good are demanded?
70
If a demand curve goes through the point P = $6 and Qd = 400, then
both a and c
If a supply curve goes through the point P = $10 and Qs = 320, then
$10 is the lowest price that will induce firms to supply 320 units.
Use the following general linear supply function:
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good.If PI = $20 and F = 60 what is the equation of the supply function?
Qs = 480 + 6P
Use the following general linear supply function:
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. If PI = $20, F = 60, and the demand function is Qd = 600 - 6p the equilibrium price and quantity are, respectively,
P = $10 and Q = 540.
Use the following general linear supply function:
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Now suppose PI = $40 and F = 50, what is the largest amount of the good that firms will supply when the price of the good is $20?
340 units
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. When PI = $40 and F = 50, the INVERSE supply function is
P = -36.667 + 0.1667Qs.
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Suppose PI = $40 and F = 50, what is the lowest price that will induce firms to supply 400 units of output?
$30
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Suppose PI = $40, F = 50, and the demand function is Qd = 700 - 6P , then if government sets a price of $50 what will be the result?
a surplus of 120
Qs = 40 + 6P - 8PI + 10F
where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. Suppose PI = $40, F = 50, and the demand function is Qd = 700 - 6P , then if government sets a price of $30 what will be the result?
a shortage of 120
Qd = a + bP + cM + dPR
where Qd = quantity demanded, P = the price of the good, M = income, PR = the price of a good related in consumption. The law of demand requires that
b < 0.
Qd = a + bP + cM + dPR
where Qd = quantity demanded, P = the price of the good, M = income, PR = the price of a good related in consumption.If c = 15 and d = 20, the good is
both a and c
Qd = a + bP + cM + dPR
whereQd = quantity demanded, P = the price of the good, M = income, PR = the price of a good related in consumption.For the general linear demand function given above
all of the above
If the current price of a good is $10, market demand is Qd = 400 - 20P, and market supply is Qs = -50 + 10P, then
Both b and c
Yesterday's newspaper reported the results of a study indicating that people who eat more bananas are more attractive to the opposite sex. What do you expect to happen to the market price and quantity of bananas?
price will increase, quantity will increase
If the market price of eggs rises at the same time as the market quantity of eggs purchased decreases, this could have been caused by
a decrease in supply with no change in demand.
Derrick owns and operates a bakery. Every Saturday he bakes a batch of fresh kolaches, and every Saturday he sells all the kolaches and has to turn some customers away. Which of the following statements is correct?
both a and c
In which of the following cases must price always fall?
Both c and d
Consumer surplus
all of the above
If the demand price for the 2,000th unit of a good is $10, then
Both b and d
Suppose an individual buyer values a pound of butter at $10. If the market price of butter is $8, what is the consumer surplus for this buyer?
$2
If the market price of a good is $150 and the supply price of the good is $70, what is the producer surplus if any?
$80
Suppose the demand and supply curves for good X are both linear. The demand price for the first unit of X is $28, and the supply price for the first unit of X is $6. If the equilibrium price for good X is $16 and the equilibrium quantity of X is 24,000 units, then total consumer surplus is $________, total producer surplus is $_________, and total social surplus is $_____________.
$144,000; $120,000; $264,000
Suppose there are only three consumers in the market for a good and each consumer will buy only one unit of the good. Their individual economic values for the good are $6, $8, and $12, respectively. If the market price for the good is $10, what is the total consumer surplus for the three buyers?
$2
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