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Macroeconomics 4.5 Studyguide
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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
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
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
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
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
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
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
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 = 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
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
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
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
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
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
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.
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