Test Bank Chapter 2 (2) (1)

For a market with following information: P = 80 - 0.25Q; P = 4+0.75Q 1. Derive direct demand and direct supply; 2. find demand-choke price and supply-choke price 3. find equilibrium price and quantity 4. If market price is 50, what is market outcome (surplus or shortage by how much

Problem 2 The following table shows the behavior of buyers and sellers in a Pizzeria. price per pizza in $ 0.5 1 1.5 2 2.5 3 3.5 quantity requested 280 260 225 170 105 60 35 quantity available 40 135 225 265 290 310 320 a- Draw the demand and supply curves, name the axes. Interpret the shape of the two curves. b- What is the equilibrium price and quantity. c- If the price was initially set at $2, explain how can we return to equilibrium? d- If the price was initially set at $0.5, explain how can we return to equilibrium?

a) In the market for sugary drinks, the current equilibrium price is $10 and the equilibrium quantity is 30. The demand choke price is $50 and the supply choke price is $5 (a) Draw a demand and supply diagram, and shade the regions that represent consumer and producer welfare. Calculate the Total welfare in this market b) In this market, you now know that E D = −0.4 and E S = 1.2. Redraw your diagram in part (a) with the correct sloping curves. In this part you do not have to shade the welfare regions. All you need to do is redraw the diagram with the same equilibrium price and quantity, and choke prices but adjust the slope of each curve to reflect their respective elasticity c) If a tax was to be implemented in this market, what percentage of the burden is borne by the buyer? d) The government plans to discourage the consumption of sugary drinks and as such, they implemented a $1 tax on every bottle produced. In this situation, the suppliers are taxed directly but they hope to pass…

QUESTION 4 (11 MARKS) A group of grocery stores will buy 80 units of apples from the wholesaler if the price is $320 and 120 units if the price is $280. The supplier will supply 50 units if the price is $100, and 75 units if the price is $150. i. Write the demand and supply functions. (4 marks) ii. Find the market equilibrium. (3 marks) 111. If the government impose a tax of $30. Find the new market equilibrium. (4 marks)

Table 4-6 Price (Dollars per unit) 5 4 3 2 1 Quantity Demanded (Units) 20 30 40 50 60 Refer to Table 4-6. If the price were $4, a Quantity Supplied (Units) 60 50 40 30 20 shortage of 10 units would exist, and price would tend to rise. surplus of 20 units would exist, and price would tend to fall. shortage of 20 units would exist, and price would tend to rise. surplus of 10 units would exist, and price would tend to fall.

Market demand is given as Qd = 60 P. Market supply is given as Qs = 3P. What would result if the market price were $10? a. a shortage of 20 b. a shortage of 30 c. a surplus of 30 d. a surplus of 20

A). Draw the supply and demand curves for the market of specific good. B). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price ceiling of $3 what happens? Draw the new graph explaining how quantities are affected by that decision. C). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price floor of $5 what happens? Draw the new graph explaining how quantities are affected by that decision.

QUESTION 3: Table 3 Price per Cheeseburger $5 6 7 8 9 Quantity Demanded (Cheeseburgers per Month) B) $6. C) $7. D) $8. ANSWER: 1,500 1,200 900 600 300 Quantity Supplied (Cheeseburgers per Month) 500 700 900 1,100 1,300 a). Refer to Table 3. This market will be in equilibrium if the price per cheeseburger is A) $5. b). Refer to Table 3. If the price per cheeseburger is $6, the price will A) remain constant because the market is in equilibrium. B) decrease because there is an excess demand in the market. C) increase because there is an excess demand in the market. D) decrease because there is an excess supply in the market. ANSWER: c). Refer to Table 3. If the price per cheeseburger is $9, there is a(n) A) market equilibrium. B) excess demand of 500 units. C) excess demand of 300 units. D) excess supply of 1,000 units. ANSWER:

12 . Problems and Applications Q10 A market is described by the following supply and demand curves: QSQS  =  =  3P3P QDQD  =  =  400−P400−P   The equilibrium price is   and the equilibrium quantity is   .   Suppose the government imposes a price ceiling of $80. This price ceiling is    , and the market price will be   . The quantity supplied will be   , and the quantity demanded will be   . Therefore, a price ceiling of $80 will result in    .   Suppose the government imposes a price floor of $80. This price floor is    , and the market price will be   . The quantity supplied will be   and the quantity demanded will be   . Therefore, a price floor of $80 will result in    .   Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is: QSQS  =  =  3(P−40)3P−40   With this tax, the market price will be   , the quantity supplied will be   , and the quantity demanded will be   . The passage…

Consider the market for wireless headphones using the graph below. Price 50 Supply 40 30 20 10 Demand 100 200 300 400 500 Quantity 1. Wh is the equilibrium price and quantity in this market? 2. Calculate the producer and consumer surplus in this market. 3. If consumer income increased and this is a normal good, what will happen to the equilibrium price and quantity? (explain generally not specific numbers).

If the price of a good starts out below the equilibrium price without a price control, then  (please choose all the answers that are correct)   A. suppliers will supply less, pushing the price down   B. consumers will compete to bid the price up    C. suppliers will compete to bid the price up    D. the market starts with a surplus of supply over demand   E. consumers will demand more than the equilibrim quantity

Price (dollars per bushel) 5 4 3. 2. 2 3 4 5 6 Quantity (millions of bushels per year) At harvest time the supply of wheat is perfectly inelastic. If the government taxes wheat at $1 a bushel, then A) the buyer pays the entire tax. B) the seller and the buyer split the tax evenly. C) the seller and the buyer split the tax but the seller pays more. D) the seller pays the entire tax.

Mc 3 $1.60 1.00+ 50- 130 Multiple Choice Quantity $1.00 and 200. $1.60 and 290. 200 Refer to the diagram. The equilibrium price and quantity in this market will be $1.60 and 130 $0.50 and 130 290 Supply Demand

Use the table below to answer the following questions: Quantity Supplied Price Quantity Demanded 5000 $2 12,000 6000 $4 9500 7000 $6 7000 8000 $8 4500 9000 $10 2000 a) If the price in this market is $8, find quantity demanded. b) If the price in this market is $8, find quantity supplied. c) If the price in this market is $8, will there be a surplus (excess supply) or a shortage (excess demand)? d)If the price in this market is $8, how big is the imbalance in the market? e) Find the equilibrium price and quantity.   Question 3 options:

This is the market for HOT CHOCOLATE, which is a normal good and is produced with cocoa beans. We know that hot tea is a substitute for hot chocolate and whipped cream is a complement. Quantity Surplus or Price Quantity Supplied Demanded Shortage $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 1. Complete the table above finding a Shortage or a Surplus. Draw a graphical illustration of the market and find the equilibrium price and equilibrium quantity. For the remaining questions, explain by words or show graphically how equilibrium price and equilibrium quantity of hot chocolate would change (due to changes in Supply or Demand) if: 2. The price of cocoa beans falls; 3. The price of tea falls; 4. Consumer income falls because of a recession.

2. When the price of Tacos is $1.50, there is a shortage in the market of Tacos of 15 units. In response to the shortage, sellers increase the price of Tacos to $2.50 and the market clears with the corresponding increase in quantity supplied being equal to the quantity demanded at that price. Total surplus in the market for Tacos is maximized when the price of Tacos is more than $2.50   the price of Tacos is $1.50   the price of Tacos is $2.00   the price of Tacos is $2.50

QUESTION 3: Table 31 Price per Cheeseburger $5 6 7 8 9 Quantity Demanded (Cheeseburgers per Month) 1,500 1,200 900 600 300 Quantity Supplied (Cheeseburgers per Month) 500 700 900 1,100 1,300 a). Refer to Table 3. This market will be in equilibrium if the price per cheeseburger is A) $5. B) $6. C) $7. D) $8. ANSWER: b). Refer to Table 3. If the price per cheeseburger is $6, the price will A) remain constant because the market is in equilibrium. B) decrease because there is an excess demand in the market. C) increase because there is an excess demand in the market. D) decrease because there is an excess supply in the market. ANSWER: c). Refer to Table 3. If the price per cheeseburger is $9, there is a(n) A) market equilibrium. B) excess demand of 500 units. C) excess demand of 300 units. D) excess supply of 1,000 units. ANSWER:

Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as follows: a. Thousands of bushels demanded 85 80 75 70 65 60 Price per bushel $3.40 3.70 4.00 4.30 4.60 4.90 Thousand of bushels Supplied 72 73 75 77 79 81 Surplus (+) or shortage (-) What will be the market or equilibrium price? What is the equilibrium quantity? Using the surplus-shortage column, explain why your answers are correct. b. Graph the demand for wheat and the supply of wheat. Be sure to label the axes of your graph correctly. Label equilibrium price "P" and the equilibrium quantity "Q." c. Why will $3.40 not be the equilibrium price in this market? Why not $4.90? "Surpluses drive prices up; shortages drive them down." Do you agree? d Now suppose that the government establishes a ceiling price of, say, $3.70 for wheat. Explain carefully the effects of this ceiling price. Demonstrate your answer graphically. What might prompt the government to establish a ceiling…

Market Equilibrium.Please Help

Lesson 10 Question 7

Price of Gasoline P3 P₂ P₁ 0 9₂ 9₂ 52 D S₁ Price Ceiling Quantity of Gasoline Refer to the figure above. With a price ceiling present in this market, what will happen when the supply curve for gasoline shifts from S₁ to S₂? The market price will stay at P₁ due to the price ceiling. A shortage will occur at the price ceiling of P2. The price will increase to P3. A surplus will occur at the new market price of P₂.

Graph the supply and demand curves from the table. P ($) QD Qs 6.00 130 100 6.50 120 120 7.00 110 140 7.50 100 160 90 180 8.00 8.50 80 200 9.00 70 220 What is the market clearing price? What is the equilibrium quantity? When the price is $8.00 is there a surplus or shortage and how much is it?

40) Use the following graph for a competitive market to answer the question below. $3.50 * $2.50 300 400 Price A $1.25 D Quantity Assume the government imposes a $2.25 tax on suppliers, which results in a shift of the supply curve from S1 to S2. How much of the total tax revenue is paid by the buyer? 41) You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost $40 to assemble your costume. After spending $40 on the costume, you realize that the additional pieces you need will cost you $25 more. The marginal cost of completing the costume is $( ).

solve the question

Tax sellers

The data in the table above represent the market demand and supply for strawberries over a range of prices. Price(Cents) Quantity Demand(Million tin/ year) Quantity supplied(Million tins/year) 10 90 30 20 80 50 30 70 70 40 60 90 50 50 110  4.Define the equilibrium of a market. Find the equilibrium price and quantity. 5.Suppose that an increase in consumers’ income results in an increase of strawberries’ demand.The demand of strawberries rises by 30 million tins/year at each price level. Find the new equilibrium price and quantity.

In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. After the market changes, what is the consumer surplus? A) $18B) $12C) $9D) $6E) $2

PRICE $4 Supply Demand 0 10 QUANTITY (units) In the market shown in the graph above, at a price of $5, there will be (A) a surplus and the price will eventually fall D B a surplus generating a decrease in demand a shortage and the price will eventually rise a shortage generating an increase in supply ய E an increase in supply and a decrease in demand

Question 3 The equations for demand and supply of a market are given below. Q is quantity, and P is price in the market. Qa = 1000 - 2P %3D Q = 500 + 3P %3D How much is equilibrium quantity and equilibrium price (show your work)? Remember, at equilibrium the quantity demanded equals the quantity supplied. a. Explain what will happen if there is an effective price control of $50, imposed by the government in this market. Using this data, please graph the market. Label the vertical P, from 0 to 150 using incre- ments of 50. On the horizontal Q, from 0 to 1000 using increments of 100. Show the new quantity demanded and quantity supplied in the model. What type of price control is in this question; what b. does it create in the market?

Don't use Ai