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Exam 3: Demand, Supply, and Market Equilibrium

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Question 21

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Differentiate between a normal (superior)and an inferior good.

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A normal (superior)good is one whose dem...

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Question 22

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(a)Using the schedules given,determine the demand equation and the supply equation.

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(b)What is the intercept of the demand...

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Question 23

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Use the data in the following table to explain the economic effects of a price ceiling at $6,at $5,and at $4.

Despite a higher price for widgets,buyers are purchasing more units.How is this possible if the law of demand has not been violated? Give and explain two distinct reasons.

What effect should each of the following have upon the demand for MP3 players? Explain your reasoning in each case. (a)the development of reasonably-priced smart phones that compete with MP3 players (b)an increase in population and incomes (c)a substantial increase in the number and quality free downloadable MP3s (d)consumer expectations of substantial price increases in MP3 players (e)a decrease in the price of MP3 players

Despite a lower price for its product,the widget industry is selling fewer units.How is this possible if the law of demand has not been violated? Give and explain two distinct reasons.

What are the consequences for equilibrium price and quantity if the supply of pink salmon has increased and the demand for pink salmon has decreased? Assume that supply has increased more than demand has decreased

Given the products below and the events that affect them,indicate what happens to demand,supply,equilibrium quantity,and equilibrium price.Identify the determinant of demand and supply that causes the shifts. (a)Calculators.More schools require students to buy and use calculators;improved productivity shortens the time it takes to make calculators. (b)Gasoline.Oil production declines due to a crisis in the Middle East;people take more car vacations and drive more. (c)New homes.The average incomes fall as the economy moves into recession;the productivity of home construction workers and builders increases. (d)Tobacco.The government cut its subsidy to tobacco farmers;more people quit smoking.

What effect will each of the following have upon the supply of television sets? Explain your reasoning in each case. (a)an increase in the price of electronic equipment used in producing television sets (b)a decline in the number of firms producing television sets (c)a large new tariff on imported Japanese TV sets (d)new inexpensive satellite dishes which make televisions more popular among consumers

Use the data in the following table to explain the economic effects of a price ceiling at $9.

Economist Jones defines an increase in supply as a decrease in the prices needed to ensure various amounts of a good being offered for sale.Economist Brown defines an increase in supply as an increase in the amounts that producers will offer at various possible prices.Economist Cole defines an increase in supply as an increase in the amount firms will offer in the market which is caused by an increase in the price of the product.Which,if any,of these is defining an increase in supply correctly? Explain.

Explain the consequences on the primary and secondary markets for pre-setting below equilibrium prices for the popular women's figure skating event at the Olympic games?

Suppose that a decrease in the price of feed grain leads to a dramatic decrease in the price of beef.Use the income effect and the substitution effect to explain why there was an increase in the quantity of beef purchased.

Describe in words how one can recognize the market equilibrium point in a graph of a demand schedule and a supply schedule.

Evaluate.An increase in demand causes price to rise which,in turn,causes demand to fall.Therefore,an increase in demand will not have lasting effects.

Suppose a producer sells 1,000 units of a product at $5 per unit one year,2,000 units at $8 the next year,and 3,000 units at $10 the third year.Is this evidence that the law of demand is violated? Explain.

Use the data in the following table to explain the economic effects of a price floor at $8,at $9,and at $10.Explain the economic effects.

What is the difference between a change in supply and a change in quantity supplied?

Evaluate.A decrease in supply causes price to rise which,in turn,causes supply to rise.Therefore,a decrease in supply will not have lasting effects.

State the law of demand and explain why the other-things-equal assumption is critical to it.