Exam 2: Supply and Demand

Suppose that a market has the following supply and demand equations: Demand: Q_D = 380 - 10p Supply: Q_S = 80 + 5p If the government imposes a specific tax of τ on suppliers,what will be the price buyers pay and sellers receive,quantity,and government revenue from the tax (as functions of τ).What tax level maximizes the revenue the government collects from the tax?

If the supply curve of cigarettes shifts to the left,quantity demanded for cigarettes

Suppose the market for potatoes can be expressed as follows: Supply: = -20 + 10p Demand: = 400 - 20p Solve for the equilibrium price and quantity.

The National Association of Business Schools recently required that all business schools must hire three additional people with Ph.D.degrees in English literature.What is the immediate effect on the salaries of people with Ph.D.s in English literature? What will be the effect after ten years?

A rightward shift of the demand curve will lead to an

Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run.

Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels per day.The current estimates of the price elasticity of supply and demand are η = 1 and ε = -.2 respectively.What will be the effects on the market price and quantity if the U.S.government suddenly decides to purchase an additional 2 million barrels of oil? Assume that the supply and demand curves are linear and the addition consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per day.

If price is initially above the equilibrium level,

Suppose there are 100 identical firms in the rag industry,and each firm is willing to supply 10 rags at any price.The market supply curve will be a(n)

Using the supply and demand curve for wheat above,sketch the supply and demand curves demonstrating the effect of an increase in disposable consumer incomes.How does each curve shift (if at all)to the increase in income? What does the shift do to equilibrium price and quantity?

The demand curve for Widgets is given by Q_D = 6000 - 2y - 200p + 30p_G,where Q_D is the quantity of widgets demanded,y is the per capita income and p_G is the price of Gizmos.Compute the partial derivatives with respect to y and p_G.

If a government-imposed price ceiling causes the observed price in a market to be below the equilibrium price,

In the mid-1980s,the salaries of accounting professors with Ph.D.s increased dramatically.This resulted in an increase in enrollments in Ph.D.accounting programs.Since a Ph.D.degree in accounting may take at least four years to complete,the short-run elasticity of supply of accounting professors is

The change in price that results from a rightward shift in demand will be greater if

Use a supply-and-demand graph to predict what happens to sheet steel prices in the United States after quotas on Japanese and European sheet steel expire.

The expression "increase in quantity supplied" is illustrated graphically as a

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

Consumers will always pay the entire amount of a specific tax whenever