Chat with AIExam 3: A: - Demand, Supply, and Market Equilibrium
In the space below each of the following, indicate the effect [increase (+), decrease (-)] on equilibrium price (P) and equilibrium quantity (Q) of each of these changes in demand and/or supply. ![In the space below each of the following, indicate the effect [increase (+), decrease (-)] on equilibrium price (P) and equilibrium quantity (Q) of each of these changes in demand and/or supply.](https://storage.examlex.com/TB6686/11eacf22_e927_d259_aab5_d76b8f743d3d_TB6686_00.jpg)
(64) 
Verified(a) +, +; (b) -, +; (c) -, -; (d) +, -
Newspaper item: "Due to lower grain prices, consumers can expect retail prices of choice beef to begin dropping slightly this spring with pork becoming cheaper after midsummer," the Agriculture Department predicted."This reflects increasing supply," the department said.Is the term "supply" used correctly? What effects might this announcement have on consumer demand? Explain.
(81) VerifiedThe announcement does use the term "supply" correctly because the drop in price predicted is a result of lower resource (grain) prices.This means that producers of beef and pork will lower prices for each quantity on the existing supply schedule assuming "all other things remain equal."
Consumer demand at present might decrease as consumers wait to make big purchases of beef and pork in the future when prices are predicted to drop.By spring, if beef prices drop, there should be an increase in the quantity of beef demanded and probably a decrease in the demand for pork, which is a substitute for beef.By midsummer, if pork prices drop, there will be an increase in the quantity of pork demanded, and depending on what is then happening with beef prices, a decline in the demand for beef.If beef prices had continued to fall, it is hard to say whether there would be much of a change in demand due to the price of the substitute pork falling.More likely, there would be only a movement along the curve for beef if the price continued to fall.
Given the products below and the events that affect them, indicate what happens to demand, supply, equilibrium quantity, and equilibrium price.Identify the determinant of demand and supply that causes the shifts.(a) Calculators.More schools require students to buy and use calculators; improved productivity shortens the time it takes to make calculators.(b) Gasoline.Oil production declines due to a crisis in the Middle East; people take more car vacations and drive more.(c) New homes.The average incomes fall as the economy moves into recession; the productivity of home construction workers and builders increases.(d) Tobacco.The government cut its subsidy to tobacco farmers; more people quit smoking.
(86) Verified(a) The demand for calculators increases because of an increase in the number of buyers.The supply of calculators increases because of a fall in resource prices (productivity reduces resource costs).The equilibrium quantity increases, but what happens to the equilibrium price is indeterminate and depends on the magnitudes of the shifts.
(b) The supply of gasoline decreases because of a rise in resource price (oil prices increase due to a cutback in production).The demand for gasoline increases due to an increase in the taste for taking driving vacations.The equilibrium price increases, but what happens to the equilibrium quantity is indeterminate and depends on the magnitudes of the shifts.
(c) The demand for new homes decreases because of a decline in consumer incomes.The supply of new homes increases because of a fall in the price of labour resources (productivity increases reduce resource costs).The equilibrium price decreases, but what happens to the equilibrium quantity is indeterminate and depends on the magnitudes of the shifts.
(d) The supply of tobacco decreases because of a cut in government subsidies for tobacco.The demand for tobacco decreases due to a decline in the taste for smoking tobacco.The equilibrium quantity decreases, but what happens to the equilibrium price is indeterminate and depends on the magnitudes of the shifts.
The price of gold is lower today than several decades ago.Yet, the production of gold is greater than in the past.How is this possible without violating the law of supply?
(69) What are some of the characteristics of a market that can be described by a demand and supply model?
(78) Determine the equilibrium price and quantity in each of the following.(a) Demand is represented by the equation, P = 28 - .2QD and supply by the equation P = 8 + .3QS.(b) Demand is represented by the equation, P = 30 - .5QD and supply by the equation P = 5 + .5QS.(c) Demand is represented by the equation, P = 20 - .3QD and supply by the equation P = 4 + .2QS.
(74) (a) Determine the equilibrium price and quantity if demand is represented by the equation, P = 40 - .2QD and supply by the equation P = 10 + .4QS.(b) Suppose demand changes and is now represented by the equation P = 52 - .2QD.Has demand increased or decreased? What is the new equilibrium price and quantity?
(c) Suppose instead supply changes and is now represented by the equation P = 16 + .4QS.Has supply increased or decreased? What is the new equilibrium price and quantity?
(89) Assuming no government intervention, describe the market behaviour that should result if the price of a product is below its equilibrium price; then describe the behaviour that should occur if the price is above its equilibrium price.
(77) What effect should each of the following have upon the demand for MP3 players? Explain your reasoning in each case.(a) the development of reasonably-priced smart phones that compete with MP3 players
(b) an increase in population and incomes
(c) a substantial increase in the number and quality free downloadable MP3s
(d) consumer expectations of substantial price increases in MP3 players
(e) a decrease in the price of MP3 players
(82) Despite a higher price for widgets, buyers are purchasing more units.How is this possible if the law of demand has not been violated? Give and explain two distinct reasons.
(80) What are the consequences for equilibrium price and quantity if the supply of pink salmon has increased and the demand for pink salmon has decreased? Assume that supply has increased more than demand has decreased
(71) Explain the consequences on the primary and secondary markets for pre-setting below equilibrium prices for the popular women's figure skating event at the Olympic games?
(91) List five basic determinants of market demand that could cause demand to decrease.
(89) What are the consequences of an increase in the demand for Euros on the equilibrium price and quantity of Euros? Does the Canadian dollar appreciate or depreciate as a result? Explain.
(68) The demand schedules of three individuals (Tom, Dick, and Harry) are shown.If they are the only three buyers of CDs, complete the market demand schedule for CDs.Graphically, is the market demand for a product the horizontal or vertical sum of the individual demand schedules?
(100) "Government-set prices undermine the rationing function of competitive prices." Explain carefully in terms of both price ceilings and price floors.
(81) What is the difference between a change in demand and a change in quantity demanded?
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