Econ 104 Supply and Demand Questions
Econ 104 Supply and Demand Questions Econ 104
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This 5 page Study Guide was uploaded by Bailee Gustafson on Tuesday March 1, 2016. The Study Guide belongs to Econ 104 at University of Wisconsin - Milwaukee taught by Dr. Mohsen Bahmani-Oskooee in Winter 2016. Since its upload, it has received 34 views. For similar materials see Principles of Macroeconomics in Economcs at University of Wisconsin - Milwaukee.
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Date Created: 03/01/16
Chapter 4: Supply and Demand Questions 1. The mechanism of supply and demand is A fundamental tool in both microeconomics and macroeconomics. 2. When used in a professional or technical sense, the law of supply and demand refers to The market forces that show how prices and quantities are determined. 3. During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this was A severe shortage of those essential commodities. 4. A demand schedule is a table showing how the _____ of some product during a specific period of time changes as _____ changes, holding all other determinates of quantity demanded constant. Quantity demanded; the price of that product 5. The slope of a demand curve is almost always Negative, because with everything else equal, the same people will buy more of a good when its price is lower. 6. In an attempt to forecast enrollment, a major university hired and economist to give a “head count.” One variable which she would probably emphasize more than any other in trying to forecast this is Tuition (the price of attending) 7. If price rises, what happens to demand for a product? It does not change. 8. An important assumption that is made when constructing a demand schedule is that All other determinates of demand are held constant. 9. Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is interest rate. What happens to quantity of money demanded if the interest rate increases? It decreases 10. Which of the following will shift the demand curve for milk? Change in the income of buyers of milk 11. Sugarcane can be used for producing both sugar and ethanol. New regulations in certain countries now allow a higher level of ethanol in gasoline. An economist would expect sugarcane prices to ____ and quantity sold to ____. Rise; rise 12. Along a supply curve, Quantity supplied changes as price changes. 13. An upward-sloping supply curve shows that Suppliers are willing to increase production of their goods if they can receive higher prices for them. 14. If price rises, what happens to supply for a product? It does not change 15. If price rises, what happens to quantity supplied for a product? It increases 16. An important assumption that is made when constructing a supply schedule is All other determinates of supply are held constant. 17. A shift in the supply curve of bicycles resulting from higher steel prices will lead to Higher prices of bicycles 18. In January, 2,500 quarts of ice cream are sold in Boston at $2 a quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in quantity sold and price may have been caused by The release of a medical study showing that ice cream consumption improves mental health. 19. The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect An increase in output with no predictable change in price. 20. A severe freeze has once again damaged the Florida orange crop. The impact on the market oranges will be a leftward shift in The supply curve 21. Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 % more likely to develop breast cancer. Considering the market for alcohol, an economist would predict a movement Down the supply curve as the demand curve shifts. 22. In figure 1, there would be a surplus of T-shirts if the price were $10 23. Refer to Table 1. What is the equilibrium price in the example above? $7 24. Refer to Table 1. At $10, what is the surplus? 1,500 25. Refer to Table 1. At $4, what is the shortage? 4,500 26. Which of the following equations represent the demand relationship in Table 1? Q=11,000 – 1,000P 27. Which of the following equations represent the supply relationship in Table 1? Q=500 + 500P 28. If the supply curve for housing has the normal positive slope, rent controls will likely Help low-income families find suitable housing. 29. Because of falling oil prices, Libya can afford fewer imported goods. Government controls were established to limit import of cigarettes. In 1985, the market of Marlboros rose to $70 a carton. Which graph in Figure 4-2 best depicts this situation? 2 30. Refer to Exhibit 4-1. According to the data give, the equilibrium price of a weezil is $3 31. Refer Exhibit 4-1. According to the data given, when the market is in Equilibrium, how many weezils are sold? 14 32. Refer to Exhibit 4-1. If consumers decide that they want 20% fewer weezils at every price, the equation for the new demand curve for weezils will be QD= 20 – 1.6P 33. Refer to Exhibit 4-1. If the government imposes a price floor of $4 a weezil, how many weezils will be sold? 12 34. To be effective, a price floor must be Above the equilibrium price. 35. The United States typically experiences a large surplus of milk annually. This is caused by A price floor in the market.
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