Exam 4: The Market Forces of Supply and Demand

You have decided to purchase a new Range Rover SUV. A friend tells you that Land Rover will stop offering a $3000 rebate on Range Rovers starting next month. As a result of this information, what will happen to your demand curve for Range Rovers?

To find the market demand for a product, how are individual demand curves summed?

Market demand is given as Qd = 150 - 3P. Market supply is given as Qs = 2P. What would result if the market price were $25?

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

What does the market supply curve show?

Suppose both demand and supply decrease. How do the equilibrium price and quantity change?

This question deals with demand and supply and refers you to the table below. a. Given the table, graph the demand and supply curves for flashlights. Make certain to label equilibrium price and equilibrium quantity. b. What is the equilibrium price and equilibrium quantity? c. Suppose the price is currently at $5. What problem would exist in the economy? What would you expect to happen to price? Show this on your graph. d. Suppose the price is currently $2. What problem exists in the economy? What would you expect to happen to price? Show this on your graph.

What does the number of buyers affect?

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Suppose the market for standard one-family houses in a Canadian city is described by the equations Qd=(165+IM)-2.5P, and Qs=-60+10P, where Q represents the number of houses demanded or supplied per year (in 10s), P represents the price in 10 000s, and IM is the number of families immigrating into the city during the year, in 10s. a) What is the equilibrium number of houses and the equilibrium price if there were no immigration (IM=0)? Show this situation in a graph. Now, suppose 350 families have immigrated within the year (IM=35). b) Show this new situation on your graph. c) What are the new equilibrium price and number of houses? d) How many of the "old" families (non-immigrant) have lost their ability to buy a house? e) By how much does the number of houses supplied increase? f) How many of the newcomers buy a house? How could you change the demand equation if you knew that only about 10 percent of the immigrating families buy a house in the year of their arrival?

Figure 4-6 -Refer to the Figure 4-6. What happens if the demand curve shifts from D to D1?

What happens in a competitive market?

Suppose cupcakes are currently selling for $12 per dozen. The equilibrium price of cupcakes is $10 per dozen. What would we expect?

What would happen to the equilibrium price and quantity of golf club memberships if the price of landscaping and grass maintenance fell, the price of golf clubs fell, more golf courses decided to offer memberships, and health officials announced that playing golf was bad for you?

Suppose that the number of buyers in a market decreases and a technological advancement occurs. What would we expect to happen in the market?

Ad Venture is a company that produces advertising video clips. Their supply curve is Qs=-2W+6P, where W (in 10s) is the hourly wage that the company pays their workers and P (in 1000s) is the ongoing market price for a 1-minute commercial. a) If the current wage in the video industry is $35 (W=3.5), what is the minimum price that allows Ad Venture to remain in the industry (i.e., to supply a positive number of videos)? Draw the supply curve. b) If the wage is $35, how much should the market price be so that Ad Venture produces 8 videos? c) At the price you have determined at point b., how does the number of videos supplied change if the wage decreases to $30? Show this situation in your graph.

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

What does a market demand curve reflect?

What is a market?