Exam 2: Supply and Demand

Suppose that the supply and demand of wheat depend on the price of wheat (p),the amount of annual rainfall (r),and the level of disposable consumer income (I).The equations describing the supply and demand curves are given by: Q_S = 20r + 100p Q_D = 4000 - 100p + 10I Sketch a graph of the supply and demand curves for wheat and show the effects of an increase in the quantity of rainfall.How does each curve shift (if at all)from the increase in rainfall? What does this shift do to the equilibrium price and quantity (increase/decrease)?

Costs that pertain to finding a trading partner and making a trade are called

Suppose the demand curve for movie tickets has unitary price elasticity and the supply curve is perfectly price elastic.If 3 million tickets are currently sold at a price of $5,approximately how much tax revenue could the government generate from a $1 specific tax?

When the price of beef rises,consumers switch consumption to substitutes such as chicken and fish,thereby decreasing the demand for beef.

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

The rising price of oil has made it feasible to extract oil out of oily sand in Canada.Concerning the oil market,this is an example of

Suppose the demand for a particular product can be expressed as Q = 100/p.Calculate the total amount spent on this good when p = 10,20,and 50.Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be supplied unless the price is above

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

The supply of movie tickets at one theater's box office for this Saturday's 4:30 showing of a new movie is

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

The short-run price elasticity of demand for refrigerators is relatively inelastic.

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then the cross price elasticity of the quantity of product A with respect to price of product B is

If demand is given by Q = Ap^-b where A and b are positive constants,the absolute value of price elasticity of demand

During a mild winter,the price of home heating oil is expected to be less than it would be during a normal winter.

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then these two products are

-The above figure shows a graph of a market for pizzas in a large town.At a price of $7,what is the amount of excess demand?

Using the supply and demand equations for wheat,solve for the equilibrium price and quantity as functions of I and r.

Consider the demand function Qd = 150 - 2P.The effects of other determinants of Qd is reflected in