Chapter 15, Problem 2TY

For each good produced in a market economy, demand and supply determine     Comparative advantage     The price of the good sold in the market, but not the quantity bought and sold in the market     The quantity of the good bought and sold in the market, but not the price     Both price and quantity of the good bought and sold in the market     Neither price nor quantity is determined by demand and supply because prices are ultimately set by producers

Person 1 can allocate her 8-hour day between the production of two goods.A and B .Each hour devoted to Good B yields 2 units whereas each hour devoted to Good A produces 4 units Person 2can produce 3 units of Goods B or 4 units of Good A per hour Who have the absolute advantage in the production of Good B Who have the absolute advantage in the production of Goods A

Step 1 In the free market, the equilibrium quantity and demand is determined by the forces of demand curve and supply curve. Demand is the want of consumer backed by the purchasing power. The demand is downward sloping due to negative relationship between price and quantity demanded, other things being constant. Supply is the quantity seller is willing to sell in the market at the given price level. The supply curve is upward sloping due to positive relationship between the price and quantity supplied, other things being constant.       Step 2 From the given data, plot the demand and supply on graph representing quantity on the horizontal axis and the price on the vertical axis as shown in figure below:   The downward sloping demand curve intersects the upward sloping supply curve at point E corresponding to which price is $5 and quantity is 12 units. b. Subsidies is the negative tax, that is, it is given by the government to the citizens in exchange of production or consumption.…

How did the flood affect onion production? Can you show the change in equilibrium price and quantity with a diagram?   How did an export ban on onion by India affect the price of local onion in Bangladesh?  Can you show this change/ effect on a diagram?

The key to efficient resource allocation is shifting resources from low-productivity to high-productivity uses. In view of the high and expanding physical productivity of agricultural resources, explain why many economists want to divert additional resources away from farming in order to achieve allocative efficiency.

Refer to the following table. If the price in the free market is $8, then a       price q demanded q supplied 10 100 160 8 120 145 6  130 130 4 140 115 2 150 100 Choice 1 of 4:surplus of 25 units would exist and price would tend to rise.Choice 2 of 4:shortage of 25 units would exist and price would tend to fall.Choice 3 of 4:surplus of 25 units would exist and price would tend to fall.Choice 4 of 4:shortage of 25 units would exist and price would tend to rise.

Consider the market for gasoline that is initially in equilibrium. Suppose that the Middle East, a major supplier of petroleum used to produce gasoline, erupts into war. At the same time suppose that the price of electric vehicles falls. Given these changes and holding everything else constant, what happens to the equilibrium price and quantity in the market for gasoline relative to the initial equilibrium price and quantity in the market a. The equilibrium price may increase, decrease or remain the same while the equilibrium quantity will decrease b. The equilibrium price may increase, decrease or remain the same while the equilibrium quantity willincrease c. The equilibrium price will increase while the equilibrium quantity may increase, decrease or remain the same d. The equilibrium price will decrease while the equilibrium quantity may increase, decrease or remain the sam