Quiz 553

Related: Economics, Microeconomics

55 Questions

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Quiz 553

Subjective Short Answer

1. A group of buyers and sellers of a particular good or service is called a

2. Since individual buyers and individual sellers in a competitive market have no influence on
the market price, what do we call the buyers and sellers in a competitive market?

Table 4-14
The table below shows the quantities demanded of milk per month by four families at various
prices.
Price of Gallon of Milk The Berman Family The Johnson Family The Harris Family The Patel
Family
$3.00 9 15 12 14
$4.00 8 12 10 10
$5.00 7 9 8 6
$6.00 6 6 6 2

3. Refer to Table 4-14. If the four families listed are the only demanders in this market and the
price of a gallon of milk is $4.00, what is the market quantity demanded?

4. Refer to Table 4-14. If the four families listed are the only demanders in this market and the
price of a gallon of milk increases from $4.00 to $5.00, what is the change in the market quantity
demanded?

Figure 4-28

5. Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if
consumer incomes increase and this is an inferior good.
6. Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if
the price of a substitute for this good becomes more expensive.

7. Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if
the price of this good increases.

8. Refer to Figure 4-28. Using the points on the figure, describe the change that would occur if a
news report stated that the price of this good was expected to increase next week.

9. Studies show that lower cigarette prices are associated with greater use of marijuana;
therefore, tobacco and marijuana are

Figure 4-29

10. Refer to Figure 4-29. If the price increases from $5 to $6, how does the quantity demanded
change?

11. Refer to Figure 4-29. The movement from S1 to S2 is a

12. According to the law of demand, when price increases the quantity demanded of a good

13. Does a change in the price in a market result in a shift of the demand curve or in a movement
along the demand curve?

14. If income rises in the market for an inferior good, will the demand curve for the inferior good
shift to the right or to the left?

15. If income rises in the market for a normal good, will the demand curve for the normal good
shift to the right or to the left?

16. Suppose goods A and B are substitutes. If the price of good A increases, will the demand for
good B increase or decrease?

17. Suppose goods A and B are complements. If the price of good A increases, will the demand
for good B increase or decrease?

18. Suppose consumers expect the price of a good to be higher in the future than it is today.
Would the current demand for the good increase or decrease?

19. Suppose the number of buyers in a market decreases. As a result, would the demand curve in
this market shift to the right or to the left?

Table 4-15
The following table shows the number of cases of water each seller is willing to sell at the prices
listed.
Price per case Alpine Springs Brook Mountain Cascade Waters Dew Good
$0.00 0 cases 0 cases 0 cases 0 cases
$3.00 100 cases 40 cases 60 cases 100 cases
$6.00 200 cases 80 cases 120 cases 200 cases
$9.00 300 cases 120 cases 180 cases 300 cases

20. Refer to Table 4-15. If all four suppliers operate in this market, what is the market quantity
supplied when the price is $6.00 per case?

21. Refer to Table 4-15. If only Brook Mountain and Cascade Waters operate in this market,
what is the market quantity supplied when the price is $3.00 per case?

22. Refer to Table 4-15. Assuming these are the only four suppliers in this market, the function
for market supply can be written as QS=

23. Refer to Table 4-15. Assuming these are the only four suppliers in this market and the
function for market demand is QD=1000-100P, where QD is the quantity demanded and P is the
price, what is the equilibrium price?

24. Refer to Table 4-15. Assuming these are the only four suppliers in this market and the
function for market demand is QD=1000-100P, where QD is the quantity demanded and P is the
price, what is the equilibrium quantity?

25. Refer to Table 4-15. Assume these are the only four suppliers in this market and the function
for market demand is QD=1000-100P, where QD is the quantity demanded and P is the price. If
the price is $6 per case, is there a shortage or surplus, and how large is the shortage or surplus?

Figure 4-30

26. Refer to Figure 4-30. In this market for iPhones, the technology improves while all other
factors remain constant. Which curve(s) shift(s) and in which direction?

27. Refer to Figure 4-30. In this market for iPhones, the technology improves while all other
factors remain constant. Explain the change(s) in the equilibrium price and quantity.

28. Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and
the price of laptops, a substitute good, increases, while all other factors remain constant. Which
curve(s) shift(s) and in which direction?

29. Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and
the price of laptops, a substitute good, increases, while all other factors remain constant. Explain
the change(s) in the equilibrium price and quantity.

30. If corn is an input into the production of ethanol, will a decrease in the price of corn increase
the supply of ethanol or decrease the supply of ethanol?
31. Suppose researchers discover a new, lower cost method of producing calculators. As a result,
will the supply of calculators increase or decrease?

Figure 4-31
Consider the market for 2-packs of light bulbs below.

32. Refer to Figure 4-31. What are the values of the equilibrium price and quantity?

33. Refer to Figure 4-31. At a price of $3, is there a shortage or surplus, and how large is the
shortage/surplus?

34. Refer to Figure 4-31. At a price of $6, is there a shortage or surplus, and how large is the
shortage/surplus?

35. Refer to Figure 4-31. Suppose there is an improvement in technology in this market and the
price of lamps, a complementary good, increases. What changes do you predict in the
equilibrium price and quantity?

Table 4-16
The following table shows the supply and demand schedules in a market.

Price ($) Quantity

Demanded
(units) Quantity
Supplied
(units)
0 50 0
2 40 15
4 30 30
6 20 45
8 10 60
10 0 75

36. Refer to Table 4-16. What is the equilibrium price in this market?

37. Refer to Table 4-16. What is the equilibrium quantity in this market?

38. Refer to Table 4-16. At a price of $2, will there be a surplus or shortage of units in this
market?

39. Refer to Table 4-16. At a price of $8, how large of a surplus will there be in this market?

40. Refer to Table 4-16. If the supply curve shifts to the right, will the price in this market rise or
fall?
Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation , where is the
quantity demanded and is the price. Also, suppose the supply schedule can be represented by the
equation , where is the quantity supplied.

41. Refer to Scenario 4-1. What is the equilibrium price in this market?

42. Refer to Scenario 4-1. What is the equilibrium quantity in this market?

43. Refer to Scenario 4-1. Suppose the price is currently equal to 10 in this market. Is there a
shortage or surplus in this market, and how large is the shortage/surplus?

44. Refer to Scenario 4-1. Suppose the price is currently equal to 18 in this market. Is there a
shortage or surplus in this market, and how large is the shortage/surplus?

45. Refer to Scenario 4-1. Suppose the supply curve shifts to . What is the new equilibrium price
and quantity in this market?

46. Suppose the supply and demand of corn both increase. As a result, what will happen to the
equilibrium price and equilibrium quantity in the market?

47. If the supply of tennis balls, a complement to tennis racquets, decreases, what will happen to
the equilibrium price of tennis balls and to the equilibrium price of tennis racquets?

48. If the supply of pencils, a substitute for pens, increases, what will happen to the equilibrium
price of pencils and to the equilibrium price of pens?

49. If the price of steel, an input into the production of automobiles, rises, and at the same time
the price of gasoline rises, what will happen to the equilibrium price and quantity of
automobiles?

50. If the demand for a good increases at the same time as the supply of the same good
decreases, what will happen to the equilibrium price and quantity of the good?

a. What is the difference between a "change in demand" and a "change in quantity demanded?"
Graph your answer.
b. For each of the following changes, determine whether there will be a change in quantity
demanded or a change in demand.
i. a change in the price of a related good
ii. a change in tastes
iii. a change in the number of buyers
iv. a change in price
v. a change in consumer expectations
vi. a change in income
52.
a. What is the difference between a "change in supply" and a "change in quantity supplied?"
Graph your answer.
b. For each of the following changes, determine whether there will be a change in quantity
supplied or a change in supply.
i. a change in input costs
ii a change in producer expectations
iii. a change in price
iv. a change in technology
v. a change in the number of sellers

53.
a. Given the table below, graph the demand and supply curves for flashlights. Make certain to
label the equilibrium price and equilibrium quantity.

Price Quantity Demanded

Per Month Quantity Supplied
Per Month
$5 6,000 10,000
$4 8,000 8,000
$3 10,000 6,000
$2 12,000 4,000
$1 14,000 2,000

b. What is the equilibrium price and the equilibrium quantity?

c. Suppose the price is currently $5. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.
d. Suppose the price is currently $2. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.

54. Fill in the table below, showing whether equilibrium price and equilibrium quantity go up, go
down, stay the same, or change ambiguously.

No Change in Supply An Increase in Supply A Decrease in Supply

No Change in
Demand
An Increase in
Demand
A Decrease in
Demand

55. Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each
of the following would have on demand or supply. Also show how equilibrium price and
equilibrium quantity would change.
a. Winter starts, and the weather turns sharply colder.
b. The price of tea, a substitute for hot chocolate, falls.
c. The price of cocoa beans decreases.
d. The price of whipped cream falls.
e. A better method of harvesting cocoa beans is introduced.
f. The Surgeon General of the U.S. announces that hot chocolate cures acne.
g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.
h. Consumer income falls because of a recession, and hot chocolate is considered a normal good.
i. Producers expect the price of hot chocolate to increase next month.
j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.