Exam 5: Supply,demand,and Price: Applications

Using proper economic terminology,describe why Mexican restaurants often provide chips and salsa for free to their customers.

Exhibit 5-3 -Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

If the quantity demanded of medical care is higher at a zero price than at some positive price,then it follows that the demand for those specific items that make up health care will be higher (than it would be if the quantity demanded of health care were lower).

If new legislation allowed patients to sue their health-maintenance organization (HMO),we would expect the supply curve for HMO-provided health care to shift to the right and the price of such coverage to fall.

If the demand curve for tickets to a taping of a television show intersects the supply curve for tickets to that show at a negative price,then in order to put that market in equilibrium the producers would need to pay people to view the show being taped.

Exhibit 5-6 -Profit can be earned by buying _____________ and selling ____________________.

If the purchase and sale of a currently illegal drug (for example,marijuana)were decriminalized,economists would expect

If the government legalizes the purchase and sale of marijuana,the equilibrium quantity would _________ and the price would ________ if the supply of marijuana increased by _______ than the demand for marijuana increased as a result of the legalization.

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _____________ than the demand for middle seats,then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

The price of a given good is likely to be less variable with speculators than it would be without speculators.

If the price of a good ____________,the demand for its complements will __________.

Exhibit 5-4 -If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates,the result will likely be a(n)_______________ in housing prices.

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

Exhibit 5-6 -The higher the price of medical care in general,the lower the ____________________________ medical care and the ______________________ specific items that make up medical care (such as,x-rays).

Exhibit 5-6 -Refer to Exhibit 5-6.Under law 1 a renter has 30 days to vacate an apartment after being served with an eviction notice.Under law 2,the renter has 90 days to vacate after being served with an eviction notice.This graph shows that the supply of apartments is____________ under law 1 than under law 2,and thus apartment rent is _______________ under law 1 than under law 2.

Exhibit 5-5 -Refer to Exhibit 5-5.If the airline charges price P₂ for both aisle seats and middle seats,the result will be

A toll of $1 per car is imposed on a road regardless of time of day.If the toll creates equilibrium travel flows at the busiest time of day,it will create a __________ at all other times.

Exhibit 5-4 -Refer to Exhibit 5-4.If tickets for viewing television show tapings are free,for which show will fans most likely have the longest wait to get tickets?