Exam 2: Supply and Demand

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping.At the market equilibrium,if demand is more elastic than supply in absolute value,a $1 specific tax will

The California cigarette market consists of the following supply and demand curves: Q_D = 150 - 20p Q_S = 40p where Q is the number of packs of cigarettes per year (in millions!),and p is the price per pack. a.Compute the market equilibrium price and quantity. b.Calculate the price elasticities of each curve at the equilibrium price/quantity. c.California imposes a tax on cigarettes of $0.90 per pack.Suppliers pay this tax to the government.Compute the after-tax price and quantity.How much do suppliers receive net of tax (per pack)? d.Demand for cigarettes is generally more elastic over longer periods of time as consumers have more time to kick the habit.What does this imply about the tax incidence in the long run as compared to the short run?

Suppose the demand for widgets is given by Q_D = 100 - 5p - p_d + 2I,where I is average consumer income,p is the price of lemons,and p_d is the price of doodads.According to this equation,doodads are a(n)________ for widgets.

If the price of automobiles were to increase substantially,the demand curve for gasoline would most likely

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

If a consumer doubles her quantity of ice cream consumed when her income rises by 25%,then her income elasticity of demand for ice cream is

-The above figure shows four different markets with changes in either the supply curve or the demand curve.Which graph best illustrates the market for coffee after severe weather destroys a large portion of the coffee crop?

If pizza and tacos are substitutes,a decrease in the price of tacos would lead to a

An increase in the demand curve for orange juice would be illustrated as a

Suppose the following information is known about a market: 1.Sellers will not sell at all below a price of $2. 2.At a price of $10,any given seller will sell 10 units. 3.There are 100 identical sellers in the market. Assuming a linear supply curve,use this information to derive the market supply curve.

Suppose the market for grass seed can be expressed as: Demand: Q_D = 100 - 2p Supply: Q_S = 3p If government imposes a $5 specific tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected? What fraction is paid by sellers?

If the government levies a specific tax on tobacco producers,the spending of consumers will probably

If the price of automobiles were to decrease substantially,the demand curve for public transportation would most likely

The market supply curve is found by

-The above figure shows four different markets with changes in either the supply curve or the demand curve.Which graph best illustrates the market for tea after severe weather destroys a large portion of the coffee crop?

Suppose N consumers each have an identical demand curve for a good is given by Q = a - bp,where Q is the quantity demanded,p is the price,and a and b are positive constants.What is the market demand curve? Is the slope (in price)of the market demand greater or less than the slope of each individual demand curve?

The cross price elasticity of demand between two goods will be positive if

How will a decrease in price affect a firm's revenues?

Suppose a market were currently at equilibrium.A rightward shift of the supply curve would cause a(n)

Suppose the demand for pork is given by the equation Q = p^-0.5_pc^0.2 where p_c is the price of chicken.Compute the cross-price elasticity of demand for pork