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
True or false, if the government imposes a price ceiling at $50, it is binding.
True
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
Which letters represent the total consumer surplus all the buyers receive when the market is at equilibrium?
ABE
Assume the government imposes a price ceiling at $50, this would cause a _________ in the market.
Shortage
This university recently overtook the top spot in the U.S. News and World Reports list as the number college in America.
M.I.T.
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
Which letters represent the total producer surplus all the sellers receive when the market is at equilibrium?
CDF
Calculate the total consumer surplus with the price ceiling at $50.
$750
Closest Geographically Wins!
The furthest point from the ocean in the United States is the North American Pole of Inaccessibility, located in this US state?
South Dakota
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
Calculate the deadweight loss with the price ceiling at $50.
$500
Name the U.S. state capitals that have the word “City” in their name?
Jefferson City, Oklahoma City, Carson City, Salt Lake City
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.
Calculate the total producer surplus with the price ceiling at $50.
$250
Closest Wins!
The total number of escalators in the state of Wyoming
2