Exam 4: Supply and Demand: An Initial Look

Define the following terms and explain their importance to the study of economics. a.demand b.surplus c.equilibrium d.law of supply and demand e.quantity demanded

An increase in consumer income will shift both the supply and demand curves.

Figure 4-1 -If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 4-1 is appropriate?

When there is an increase in demand,

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

Exhibit 4-1 The following are the equations for the supply and demand curves in the market for weezils: Demand: $Q_{d}=20-2 P$ Supply: $Q_{s}=5+3 P$ where $Q_{d}$ is the quantity demanded, Qs is the quantity supplied, and P is the price per weezil in dollars. -Refer to Exhibit 4-1.If consumers decide that they want 20 percent fewer weezils at every price, the equation for the new demand curve for weezils will be

How much the quantity of a good traded changes after a shift of the supply curve depends on

Some hotels in Myrtle Beach, South Carolina charge over $200 a night in the summer but sometimes as little as $99 a night in the winter.Use supply and demand analysis, including graphical and verbal explanation, for these winter "sales."

Very few societies have used price controls.

Figure 4-3 -A 1985 Harvard study showed that the price of cigarettes does not affect how much an individual smokes but whether he smokes.If this is correct, which graph in Figure 4-3 shows the typical individual's demand curve for cigarettes?

The supply curve shows

In relation to prices that would prevail in an uncontrolled market, prices charged by a black market are usually

Consumers expressed outrage at the high price of chainsaws after Hurricane Andrew hit Florida and Louisiana, with newspaper editorials accusing suppliers of unconscionable price gouging.Use a supply and demand graph to assist in explaining the increase in the price of chain saws after Hurricane Andrew.

The price for labor is the wage rate.What happens to the supply of labor if wages increase?

The price of coal fell and the quantity sold also fell.Everything else being equal, it is consistent that

Shortages normally accompany an effective price floor.

A supply curve slopes upward because quantity supplied is higher when price is higher.

Distinguish between scarcity and shortage.

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was

Which of the following will shift the demand curve for milk?