Supply and Demand
What are the three reasons the Law of Demand occurs?
Substitution Effect
Income Effect
Law of Diminishing Marginal Utility
Total revenue falls as the price of a good increases if price elasticity of demand is...
Elastic
Identify the equilibrium price and quantity
$100; 50 units
Calculate the total consumer surplus with the price floor at $40.
$10
This Canadian Province is home to the Argonauts, Maple Leafs, Blue Jays and Raptors of professional sports.
Draw a graph with a demand curve for doughnuts.
Show what happens to the demand for doughnuts when the price of doughnuts increases.
Decrease in Qd no SHIFT
Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is
.44
How much total consumer surplus do all the buyers receive when the market is at equilibrium?
$1250
Calculate the deadweight loss with the price floor at $40.
$20
Also where acorns come from, Pinocchio is made from this type of wood?
Oak
Draw a properly labeled graph with a supply curve for coffee.
Show the change on the graph if a new company launches a new brand of coffee.
Increase in supply
Assume that the price for mid-sized bulldozers increased from $250,000 to $300,000 and the quantity supplied increased from 2,000 to 2,200. Calculate the price elasticity of supply coefficient.
.5
At equilibrium, how much total producer surplus do all the sellers receive?
$1000
Calculate the total producer surplus with the price floor at $40.
$50; area of a rectangle and area of a triangle.
Closest Geographically Wins!
What U.S. state has the oldest average age?
Maine
Draw a graph with a demand curve for doughnuts.
Show what happens to the demand for doughnuts when the price of muffins decreases.
Decrease in demand (substitute good becomes cheaper)
Suppose that a decrease in the price from $20 to $10 of Good G resulted in a decrease in the quantity demanded from 1,000 to 800 of Good F. Calculate the cross price elasticity of demand and state if they are complements or substitutes.
.4; Substitutes
Assume that only hamburgers are made from ground beef and that hot dogs and hamburgers are perfect substitutes.
Show what will happen in each market if the price of ground beef significantly increases.
Hint: You should have two graphs!
Supply of Hamburgers Decreases
Demand for Hot Dogs Increases
Closest Wins!
An actual unit of measurement for wine, a buttload is equal to this many gallons?
126
Draw a properly labeled graph with a supply curve for coffee.
Show the change on the graph if the government grants coffee producers a $5000 subsidy for every pound of coffee sold.
Increase in Supply
Suppose that Sean received an increase in his income from $6,000 to $18,000 of Good L. This increase in income resulted in a decrease in the quantity demanded from 2,000 to 1,500 of Good O. Calculate the income elasticity of demand and state if they are normal or inferior goods.
-.125; inferior
Studies have shown that a virus has flared up in Central and South America. So far no one has contracted the disease in the U.S., but there is growing concern it will spread throughout the country. Companies that produce insect repellent products have experienced issues with their suppliers in China as they won't open up production until mid-January, so new orders won't be delivered until early February.
Given the scenario:What will likely happen to the equilibrium price and equilibrium quantity of insect repellent products?
Hint: Draw the graph to show the result of the change in demand and supply of insect repellent products.
Price would increase; Quantity would be indeterminate.
Closest Geographically Wins!
This country has the most vending machines per capita.
Japan