Quiz 2: The Basics of Supply and Demand

Which of the following is NOT an application of supply and demand analysis? A)Understanding changing world economic conditions and their effects on prices B)Evaluating the effects of government price controls on the agricultural industry C)Determining how taxes affect aggregate consumption spending patterns D)all of the above E)none of the above

A supply curve reveals: A)the quantity of output consumers are willing to purchase at each possible market price. B)the difference between quantity demanded and quantity supplied at each price. C)the maximum level of output an industry can produce,regardless of price. D)the quantity of output that producers are willing to produce and sell at each possible market price.

Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases,with other things remaining the same,we would expect: A)the price of steel to fall. B)the demand curve for steel to shift to the right. C)the demand curve for plastic to shift to the left. D)nothing to happen to steel because it is only a substitute for plastic. E)the demand curve for steel to shift to the left.

Coffee and cream: A)are both luxury goods. B)are complements. C)are both more inelastic in demand in the long run than in the short run. D)have a positive cross price elasticity of demand.

Which of the following would shift the demand curve for new textbooks to the right? A)A fall in the price of paper used in publishing texts B)A fall in the price of equivalent used textbooks C)An increase in the number of students attending college D)A fall in the price of new textbooks.

When an industry's raw material costs increase,other things remaining the same, A)the supply curve shifts to the left. B)the supply curve shifts to the right. C)output increases regardless of the market price and the supply curve shifts upward. D)output decreases and the market price also decreases.

Sugar can be refined from sugar beets.When the price of those beets falls, A)the demand curve for sugar would shift right. B)the demand curve for sugar would shift left. C)the supply curve for sugar would shift right. D)the supply curve for sugar would shift left.

Assume that steak and potatoes are complements.When the price of steak goes up,the demand curve for potatoes: A)shifts to the left. B)shifts to the right. C)remains constant. D)shifts to the right initially and then returns to its original position.

Which of the following events will cause a leftward shift in the supply curve of gasoline? A)A decrease in the price of gasoline B)An increase in the wage rate of refinery workers C)Decrease in the price of crude oil D)An improvement in oil refining technology E)all of the above

Which of the following will NOT cause a shift in the supply of gasoline? A)An increase in the wage rate of refinery workers B)A decrease in the price of gasoline C)An improvement in oil refining technology D)A decrease in the price of crude oil

Which of the following would cause a shift to the right of the supply curve for gasoline? I.A large increase in the price of public transportation. II)A large decrease in the price of automobiles. III)A large reduction in the costs of producing gasoline. A)I only B)II only C)III only D)II and III only

You are analyzing the demand for good X.Which of the following will result in a shift to the right of the demand curve for X? A)A decrease in the price of X B)An increase in the price of a good that is a complement to good X C)An increase in the price of a good that is a substitute for X D)all of the above

The price of good A goes up.As a result,the demand for good B shifts to the left.From this we can infer that: A)good A is used to produce good B. B)good B is used to produce good A. C)goods A and B are substitutes. D)goods A and B are complements. E)none of the above

Which of the following will cause the demand curve for Beatles' compact discs to shift to the right? A)An increase in the price of the discs B)A decrease in consumers' incomes C)An increase in the price of Phil Collins' latest compact disc (a substitute) D)all of the above E)none of the above

Which of the following will NOT cause a rightward shift in the demand curve for beer? A)A change in the price of beer B)A health study indicating positive health benefits of moderate beer consumption C)An increase in the price of French wine (a substitute) D)A decrease in the price of potato chips (a complement) E)none of the above

Which of the following would cause a rightward shift in the demand curve for gasoline? I.A large increase in the price of public transportation. II)A large decrease in the price of automobiles. III)A large reduction in the costs of producing gasoline. A)I only B)II only C)I and II only D)II and III only E)I,II,and III

Suppose biochemists discover an enzyme that can double the amount of ethanol that may be derived from a given amount of biomass.Based on this technological development,we expect the: A)supply curve for ethanol to shift leftward. B)supply curve for ethanol to shift rightward. C)demand curve for ethanol to shift leftward. D)demand curve for ethanol to shift rightward.

The discussion of Figure 2.2 in the text indicates that quantity demanded for most goods tends to increase as income rises.However,the quantity of bananas demanded in the U.S.tends to decrease as income rises.Under this condition,we expect that an increase in consumer income shifts the demand curve for bananas: A)rightward B)no shift. C)leftward. D)downward.

Due to the recent increase in the price of natural gas,the quantity of coal demanded by electric power generation plants has increased.Based on this information,coal and natural gas are: A)complements. B)substitutes. C)independent goods. D)none of the above

To protect the cod fishery off the northeast coast of the U.S.,the federal government may limit the amount of fish that each boat can catch in the fishery.The result of this public policy is to: A)shift the cod demand curve to the left. B)shift the cod demand curve to the right. C)shift the cod supply curve to the right. D)shift the cod supply curve to the left.

When the current price is above the market-clearing level we would expect: A)quantity demanded to exceed quantity supplied. B)quantity supplied to exceed quantity demanded. C)a shortage. D)greater production to occur during the next period.

Assume that the current market price is below the market clearing level.We would expect: A)a surplus to accumulate. B)downward pressure on the current market price. C)upward pressure on the current market price. D)lower production during the next time period.

As long as the actual market price exceeds the equilibrium market price,there will be: A)downward pressure on the market price. B)upward pressure on the market price. C)no purchases made. D)Both A and C are correct. E)Both B and C are correct.

If the actual price were below the equilibrium price in the market for bread,a: A)surplus would develop that cannot be eliminated over time. B)shortage would develop,which market forces would eliminate over time. C)surplus would develop,which market forces would eliminate over time. D)shortage would develop,which market forces would tend to exacerbate.

Suppose the quantity of nursing services demanded exceeds the quantity of nursing services supplied.The nursing wage rate will: A)decrease. B)increase. C)not change. D)none of the above

From 1970 to 1993,the real price of a college education increased,and total enrollment increased.Which of the following could have caused this increase in price and enrollment? A)A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education. B)A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. C)A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education. D)none of the above

From 1970 to 1993,the real price of eggs decreased.Which of the following would cause an unambiguous decrease in the real price of eggs? A)A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs. B)A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs. C)A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs. D)A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.

From 1970 to 1993,the real price of eggs decreased and the total annual consumption of eggs decreased.Which of the following would cause an unambiguous decrease in the real price of eggs and an unambiguous decrease in the quantity of eggs consumed? A)A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs. B)A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs. C)A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs. D)none of the above

We observe that both the price of and quantity sold of golf balls are rising over time.This is due to: A)continual improvements in the technology used to produce golf balls. B)increases in the price of golf clubs over time. C)decreases in membership fees for country clubs with golf facilities. D)more stringent professional requirements on the quality of golf balls requiring producers to use more expensive raw materials.

Which of the following will cause the price of beer to rise? A)A shift to the right in the demand curve for beer B)A shift to the left in the supply curve of beer C)both A and B D)none of the above

The effect of the September 11 attacks on the World Trade Center on the market for office space in downtown Manhattan was that both the equilibrium price and the equilibrium quantity fell.What is the most likely explanation for this? A)Supply and demand both shifted left,and the magnitude of the demand shift was greater. B)Supply and demand both shifted left,and the magnitude of the supply shift was greater. C)Supply shifted left,demand shifted right,and the magnitude of the demand shift was greater. D)Supply shifted left,demand shifted right,and the magnitude of the supply shift was greater.

Last year,the world demand curve for copper shifted rightward due to continued economic growth in China and other emerging economies.Also,the supply curve for copper shifted leftward due to strikes and other labor disruptions at some of the copper mines.As a result,we observed: A)higher equilibrium copper prices and unambiguously lower quantities. B)higher equilibrium copper prices and unambiguously higher quantities. C)higher equilibrium copper prices and either higher or lower quantities. D)lower equilibrium copper prices and either higher or lower quantities.

Suppose the supply of textbooks is upward sloping and shifts leftward due to higher ink and paper costs.Which of the following events would leave the equilibrium price of textbooks at the same level observed before the supply shift? A)Demand is perfectly elastic (horizontal). B)Demand is downward sloping and shifts leftward. C)all of the above D)none of the above

If we plot the quantity of aluminum ore mined per year on the horizontal axis and the real annual price of aluminum ore on the vertical axis,we find that the path of price-quantity combinations generally indicates lower real prices and higher quantities over time.Which of the following statements is a plausible explanation for this observed outcome? A)Aluminum supply shifted leftward faster than the aluminum demand curve shifted rightward. B)Aluminum supply shifted rightward faster than the aluminum demand curve shifted rightward. C)Aluminum supply shifted rightward and aluminum demand remained constant. D)both A and B above E)both B and C above

The income elasticity of demand is the A)absolute change in quantity demanded resulting from a one unit increase in income. B)percent change in quantity demanded resulting from the absolute increase in income. C)percent change in quantity demanded resulting from a one percent increase in income. D)percent change in income resulting from a one percent increase in quantity demanded. E)percent change in income resulting from a one percent increase in price.

The price elasticity of demand for a demand curve that has a zero slope is A)zero. B)one. C)negative but approaches zero as consumption increases. D)infinity.

Elasticity measures A)the slope of a demand curve. B)the inverse of the slope of a demand curve. C)the percentage change in one variable in response to a one percent increase in another variable. D)sensitivity of price to a change in quantity.

Which of the following represents the price elasticity of demand? A) B) + C) × D) -

A vertical demand curve is A)completely inelastic. B)infinitely elastic. C)highly (but not infinitely)elastic. D)highly (but not completely)inelastic.

Which of these measures the responsiveness of the quantity of one good demanded to an increase in the price of another good? A)price elasticity. B)income elasticity. C)cross price elasticity. D)cross substitution elasticity.

The cross price elasticity between a pair of complementary goods will be A)positive. B)negative. C)zero. D)positive or zero depending upon the strength of the relationship.

Figure 2.1 -Refer to Figure 2.1.At point A,demand is: A)completely inelastic. B)inelastic,but not completely inelastic. C)unit elastic. D)elastic,but not infinitely elastic. E)infinitely elastic.

Figure 2.1 -Refer to Figure 2.1.At point B,demand is: A)small. B)inelastic,but not completely inelastic. C)unit elastic. D)elastic,but not infinitely elastic. E)infinitely elastic.

Figure 2.1 -Refer to Figure 2.1.At point C,demand is: A)completely inelastic. B)inelastic,but not completely inelastic. C)unit elastic. D)elastic,but not infinitely elastic. E)infinitely elastic.

Figure 2.1 -Refer to Figure 2.1.At point D,demand is: A)completely inelastic. B)inelastic,but not completely inelastic. C)unit elastic. D)elastic,but not infinitely elastic. E)infinitely elastic.

Figure 2.1 -Refer to Figure 2.1.At point E,demand is: A)completely inelastic. B)inelastic,but not completely inelastic. C)unit elastic. D)elastic,but not infinitely elastic. E)infinitely elastic.

Which of the following statements about the diagram below is true? A)Demand is infinitely elastic. B)Demand is completely inelastic. C)Demand becomes more inelastic the lower the price. D)Demand becomes more elastic the lower the price.

Which of the following statements about the diagram below is true? A)Demand is infinitely elastic. B)Demand is completely inelastic. C)Demand becomes more inelastic the lower the price. D)Demand becomes more elastic the lower the price.

Which of the following statements about the diagram below is true? A)Demand is infinitely elastic. B)Demand is completely inelastic. C)Demand becomes more inelastic as price declines. D)Demand becomes more elastic as price declines.

Along any downward sloping straight-line demand curve: A)both the price elasticity and slope vary. B)the price elasticity varies,but the slope is constant. C)the slope varies,but the price elasticity is constant. D)both the price elasticity and slope are constant.

Which of the following pairs of goods are most likely to have a negative cross price elasticity of demand? A)Hotdogs and hotdog buns B)Coke and Pepsi C)Rail tickets and plane tickets D)A Luciano Pavarotti compact disc and a Placido Domingo compact disc (Both Pavarotti and Domingo are opera stars.)

Consider the demand curve of the form Q = a - bP.If a is a positive real number,and b = 0,then demand is A)completely inelastic. B)inelastic,but not completely. C)unit elastic. D)elastic,but not infinitely.

For most consumer goods,the own price elasticity of demand is A)negative only when price decreases. B)negative regardless of the direction of the price change. C)positive only when price decreases. D)positive regardless of the direction of the price change.

If two goods are substitutes,the cross price elasticity of demand must be A)negative. B)positive. C)zero. D)infinite.

Suppose the demand for gourmet coffee can be represented by a linear demand curve.At the prevailing market price the income elasticity of demand for gourmet coffee is 2.When income rises the demand curve for gourmet coffee: A)becomes less elastic at every price. B)becomes less elastic at the price that prevailed before the change in income C)becomes more elastic at every price D)becomes more elastic at the price that prevailed before the change in income

The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3.If we expect the price of jelly to decline by 15%,what is the expected change in the quantity demanded for peanut butter? A)+15% B)+45% C)+4.5% D)-4.5%

For U.S.consumers,the income elasticity of demand for fruit juice is 1.1.If the economy enters a recession next year and consumer income declines by 2.5%,what is the expected change in the quantity of fruit juice demanded next year? A)-2.75% B)+2.75% C)-27.5% D)+27.5%

The price elasticity of gasoline supply in the U.S.is 0.4.If the price of gasoline rises by 8%,what is the expected change in the quantity of gasoline supplied in the U.S.? A)+3.2% B)-3.2% C)+32.0% D)+0.32%

Ice cream can be frozen.In the short run the magnitude of the own price elasticity of demand for ice cream: A)is higher than in the long run. B)is lower than in the short run. C)is the same as in the long run. D)does not depend on the fact that ice cream can be frozen.

The introduction of refrigerators into American homes: A)decreased the magnitude of the short run own price elasticity of demand for raw meat. B)did not affect the short run own price elasticity of demand for raw meat. C)increased the magnitude of the short run own price elasticity of demand for raw meat. D)decreased the magnitude of the short run own price elasticity of demand for smoked meats.

Use the following statements to answer this question: I.Even though people need water to survive,the price of water is less than the price of diamonds because water is in greater supply than diamonds. II)Suppose that the demand for corn is highly price inelastic.If every corn farmer's harvesting technologies become more efficient,the total revenue received by all corn farmers would fall. A)I and II are true. B)I is true,and II is false. C)II is true,and I is false. D)I and II are false.

Due to capacity constraints,the price elasticity of supply for most products is: A)the same in the long run and the short run. B)greater in the long run than the short run. C)greater in the short run than in the long run. D)too uncertain to be estimated.

In the long run,new firms can enter an industry and so the supply elasticity tends to be A)more elastic than in the short run. B)less elastic than in the short run. C)perfectly elastic. D)perfectly inelastic.

A freeze in Florida's orange growing regions will: A)result in a sharp increase in the price of oranges in the short run because demand and supply are highly inelastic. B)result in a sharp increase in the price of oranges in the short run because demand and supply are highly elastic. C)result in a sharp decrease in the price of oranges in the short run because demand is highly inelastic and supply is highly elastic. D)result in little change in the price of oranges in the short run because supply is infinitely elastic.

Use the following two statements to answer this question: I.The supply of newly mined copper is more elastic in the long run than in the short run. II)The supply of scrap copper is more elastic in the short run than in the long run. A)Both I and II are true. B)I is true,and II is false. C)I is false,and II is true. D)Both I and II are false.

This year a new oil field with substantial reserves has been discovered.Such discoveries are not made every year.Therefore an increase in the demand for oil will: A)increase the long run price of oil more than the short run price of oil. B)increase the long run price of oil less than the short run price of oil. C)ensure the long run price of oil and short run price of oil increase by the same amount. D)ensure that the short run price of oil falls. E)ensure that the short run price of oil remains unchanged.

An important determinant of the amount of grains harvested next year by Ethiopian farmers is the amount of seeds planted this year.Given that Western nations have guaranteed to donate five hundred tons of grain next year,this year the Ethiopian farmers will: A)plant more seeds as the food aid establishes a minimum price for grain. B)plant more seeds as the farmers' confidence is restored. C)plant the same amount of seeds as they would have without the food aid. D)plant fewer seeds as consumers demand for grain is completely price elastic. E)plant fewer seeds as the price of grain will be lower with the food aid.

There are two techniques of egg production: free range (where hens roam around the farm)or factory (where hens are fed and watered in wire cages).The free range technique has a much more elastic supply curve than the factory technique.When the demand for eggs falls: A)egg production using the factory technique falls less than with the free range technique. B)egg production using the factory technique falls more than with the free range technique. C)the production using both techniques falls by the same amount. D)the factory egg producers supply curve shifts inward. E)the free range egg producers supply curve shifts inward.

A demand curve of the form: Q = a - bP,where a and b are positive real numbers,: A)is an upward sloping straight line. B)has a constant price elasticity of demand. C)is a downward sloping straight line. D)is a parabolic curve.

Consider a supply curve of the form: Q = c + dP.If d equals zero,then supply is: A)completely inelastic. B)inelastic,but not completely inelastic. C)elastic,but not infinitely elastic. D)infinitely elastic

Consider a linear,upward sloping supply curve.If the supply curve shifts upward,then: A)the price elasticity of supply will increase. B)the price elasticity of supply will increase if the slope of the supply curve is greater than one. C)the price elasticity of supply will increase if the slope of the supply curve is greater than one and the lowest price needed to induce firms to supply anything is positive. D)the price elasticity of supply will be constant. E)none of the above

For computers and other business equipment,small changes in business earnings tend to generate relatively large short-run changes in the demand for this equipment.In the long run,the responsiveness of demand for business equipment with respect to income changes tends to be: A)even more responsive. B)less responsive. C)equally responsive. D)none of the above

For computers and other business equipment,small changes in business earnings tend to generate relatively large short-run changes in the demand for this equipment,and the long-run income response tends to be smaller.Industries that face demand behavior of this type are known as: A)natural monopolies. B)cartels. C)cyclical industries. D)constant-cost industries.

For automobile demand in the U.S.,the income response tends to be larger in the: A)short run. B)long run. C)The income response is the same in the long run and the short run. D)We do not have enough information to answer this question.

A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded,P is the product price,and I is consumer income.To compute an appropriate value for c,we can use observed values for Q and I and then set the estimated income elasticity of demand equal to: A)c(I/Q) B)c(Q/I) C)-b(I/Q) D)Q/(cI)

A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded,P is the product price,and I is consumer income.To compute an appropriate value for b,we can use observed values for Q and P and then set -b(P/Q)equal to the: A)income elasticity of demand. B)cross-price elasticity of demand. C)price elasticity of demand. D)price elasticity of supply.

When the government controls the price of a product,causing the market price to be above the free market equilibrium price, A)all producers gain. B)both producers and consumers gain. C)only consumers gain. D)some,but not all,sellers can find buyers for their goods.

When the government controls the price of a product,causing the market price to be below the free market equilibrium price, A)some consumers gain from the price controls and other consumers lose. B)all producers gain from the price controls. C)both producers and consumers gain. D)all consumers are better-off.

Suppose that,at the market clearing price of natural gas,the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6.What will result from a price ceiling that is 10 percent below the market clearing price? A)A shortage equal to 1.8 percent of the market clearing quantity B)A shortage equal to 0.6 percent of the market clearing quantity C)A shortage equal to 18 percent of the market clearing quantity D)A shortage equal to 6 percent of the market clearing quantity E)More information is needed.

What happens if price falls below the market clearing price? A)Demand shifts out. B)Supply shifts in. C)Quantity demanded decreases,quantity supplied increases,and price falls. D)Quantity demanded increases,quantity supplied decreases,and price rises.

Which of the following results from a binding price floor? A)Equilibrium B)Excess demand C)Excess supply D)Shortage

Other things being equal,the increase in rents that occurs after rent controls are abolished is smaller when A)the own price elasticity of demand for rental homes is price inelastic. B)the own price elasticity of demand for rental homes is price elastic. C)the own price elasticity of demand for rental homes has unitary price elasticity. D)rented homes and owned homes are complements. E)rented homes and owned homes are substitutes.

Suppose the U.S.government imposes a maximum price of $5 per gallon of gasoline,and the current equilibrium price is $3.50 per gallon.This policy represents a: A)binding price floor. B)non-binding price floor. C)binding price ceiling. D)non-binding price ceiling.

Which of the following public policies is an example of a price ceiling? A)Support prices for agricultural commodities B)Minimum wage laws C)Rent control program D)all of the above

The inverse demand curve for product X is given by: P_X = 25 - 0.005Q + 0.15P_Y, where P_X represents price in dollars per unit,Q represents rate of sales in pounds per week,and P_Y represents selling price of another product Y in dollars per unit.The inverse supply curve of product X is given by: P_X = 5 + 0.004Q. a.Determine the equilibrium price and sales of X.Let P_Y = $10. b.Determine whether X and Y are substitutes or complements.

The daily demand for hotel rooms on Manhattan Island in New York is given by the equation Q_D = 250,000 - 375P.The daily supply of hotel rooms on Manhattan Island is given by the equation Q_S = 15,000 + 212.5P.Diagram these demand and supply curves in price and quantity space.What is the equilibrium price and quantity of hotel rooms on Manhattan Island?

Suppose a new discovery in computer manufacturing has just made computer production cheaper.Also,the popularity and usefulness of computers continues to grow.Use Supply and Demand analysis to predict how these shocks will affect equilibrium price and quantity of computers.Is there enough information to determine if market prices will rise or fall? Why?

Suppose that due to more stringent environmental regulation it becomes more expensive for steel production firms to operate.Also,recent technological advances in plastics has reduced the demand for steel products.Use Supply and Demand analysis to predict how these shocks will affect equilibrium price and quantity of steel.Can we say with certainty that the market price for steel will fall? Why?

Historically,investors have considered gold commodities to be a good investment to preserve wealth in times of inflation.If investors are no longer worried about inflation and gold demand decreases,what do you expect will happen to gold prices? How would your answer change if you learn that a recent gold mine discovery will increase the supply of gold?

The currency used by the Confederate States of America during its brief existence from 1861 to 1865 has become a collector's item today.The Confederate Currency supply is perfectly inelastic.As the demand for the collectible increases and some of the old currency is destroyed or no longer of value as a collectible,what happens to the market price?

Suppose the cable TV industry is currently unregulated.However,due to complaints from consumers that the price of cable TV is too high,the legislature is considering placing a price ceiling on cable TV below the current equilibrium price.Assuming the government does make this price ceiling law,please construct a diagram that shows the impact of this law on the cable TV market,and please briefly explain the effects on market prices and quantities with supply and demand analysis.Also,if the cable TV company is worried about disgruntling customers,the company may introduce a different type of programming that is cheaper for the company to provide yet is equally appealing to customers.What would be the effects of this action?

Suppose that the resale of tickets to professional football games is illegal in Missouri.Due to the high demand for Chiefs (who play in Kansas City,Missouri)tickets there is a shortage of tickets at the current ticket price.Given that the Chiefs will not raise the price at which they sell the tickets,what would be the result of allowing tickets to be resold in a secondary market at whatever price the market would support? If speculators entered the market and began buying tickets directly from the Chiefs in hopes of reselling the tickets later,what would happen to the line outside of the ticket offices when the tickets are initially sold?

Harding Enterprises has developed a new product called the Gillooly Shillelagh.The market demand for this product is given as follows: Q = 240 - 4P a.At what price is the price elasticity of demand equal to zero? b.At what price is demand infinitely elastic? c.At what price is the price elasticity of demand equal to one? d.If the shillelagh is priced at $40,what is the point price elasticity of demand?

The demand for a bushel of wheat in 1981 was given by the equation Q_D = 3550 - 266P.At a price of $3.46 per bushel,what is the price elasticity of demand? If the price of wheat falls to $3.27 per bushel,what happens to the revenue generated from the sale of wheat?

The demand for packs of Pokemon cards is given by the equation Q_D = 500,000 - 45,000P.At a price of $2.50 per pack,what is the quantity demanded? At $5.00 per pack,what is the price elasticity of demand?

The monthly supply of desktop personal computers is given by the equation Q_S = 15,000 + 43.75P.At a price of $800,what is the price elasticity of supply?

The demand for tickets to the Daytona 500 NASCAR event is given by the equation Q_D = 350,000 - 800P.The supply of tickets to the event is given by the capacity of the Daytona track,which is 150,000.What is the equilibrium price of tickets to the event? What is the price elasticity of demand at the equilibrium price? What is the price elasticity of supply at the equilibrium price?

Midcontinent Plastics makes 80 fiberglass truck hoods per day for large truck manufacturers.Each hood sells for $500.00.Midcontinent sells all of its product to the large truck manufacturers.Suppose the own price elasticity of demand for hoods is 0.4 and the price elasticity of supply is 1.5. a.Compute the slope and intercept coefficients for the linear supply and demand equations. b.If the local county government imposed a per unit tax of $25.00 per hood manufactured,what would be the new equilibrium price of hoods to the truck manufacturer? c.Would a per unit tax on hoods change the revenue received by Midcontinent?

Suppose that a small market Major League Baseball team currently charges $12 for a ticket.At this price,they are able to sell 12,000 tickets to each game.If they raise ticket prices to $15,they would sell 11,053 tickets to each game.What is the price elasticity of demand at $12? If the demand curve is linear,what is the algebraic expression for demand?

Suppose that the short-run world demand and supply elasticities for crude oil are -0.076 and 0.088,respectively.The current price per barrel is $30 and the short-run equilibrium quantity is 23.84 billion barrels per year.Derive the linear demand and supply equations.

Suppose that the long-run world demand and supply elasticities of crude oil are -0.906 and 0.515,respectively.The current long-run equilibrium price is $30 per barrel and the equilibrium quantity is 16.88 billion barrels per year.Derive the linear long-run demand and supply equations.Next,suppose the long-run supply curve you derived above consists of competitive supply and OPEC supply.If the long-run competitive supply equation is: S_C = 7.78 + 0.29P,what must be OPEC's level of production in this long-run equilibrium?

The U.S.Department of Agriculture is interested in analyzing the domestic market for corn.The USDA's staff economists estimate the following equations for the demand and supply curves: Q_d = 1,600 - 125P Q_s = 440 + 165P Quantities are measured in millions of bushels; prices are measured in dollars per bushel. a.Calculate the equilibrium price and quantity that will prevail under a completely free market. b.Calculate the price elasticities of supply and demand at the equilibrium values. c.The government currently has a $4.50 bushel support price in place.What impact will this support price have on the market? Will the government be forced to purchase corn under a program that requires them to buy up any surpluses? If so,how much?

The market for gravel has been estimated to have these supply and demand relationships: Supply P = 10 + 0.01Q Demand P = 100 - 0.01Q, where P represents price per unit in dollars,and Q represents sales per week in tons.Determine the equilibrium price and sales.Determine the amount of shortage or surplus that would develop at P = $40/ton.

American Mining Company is interested in obtaining quick estimates of the supply and demand curves for coal.The firm's research department informs you that the elasticity of supply is approximately 1.7,the elasticity of demand is approximately -0.85,and the current price and quantity are $41 and 1,206,respectively.Price is measured in dollars per ton,quantity the number of tons per week. a.Estimate linear supply and demand curves at the current price and quantity. b.What impact would a 10% increase in demand have on the equilibrium price and quantity? c.If the government refused to let American raise the price when demand increased in (b)above,what shortage is created?

In a city with a medium sized population,the equilibrium price for a city bus ticket is $1.00,and the number of riders each day is 10,800.The short-run price elasticity of demand is -0.60,and the short-run elasticity of supply is 1.0. a.Estimate the short run linear supply and demand curves for bus tickets. b.If the demand for bus tickets increased by 10% because of a rise in the world price of oil,what would be the new equilibrium price of bus tickets? c.If the city council refused to let the bus company raise the price of bus tickets after the demand for tickets increases (see (b)above),what daily shortage of tickets would be created? d.Would the bus company have an incentive to increase the supply in the long run given the city council's decision in (c)above? Explain your answer.

The current price charged by a local movie theater is $8 per ticket.The concession stand at the theater averages $5 in revenue for each ticket sold.At the current ticket price,the theater typically sells 300 tickets per showing.If the theater raises ticket prices to $9,the theater will sell 270 tickets.What is the price elasticity of demand at $8? What happens to ticket revenue if the theater increases ticket prices to $9 from $8? What happens to concession revenue if the theater increases ticket prices? If the theater wants to maximize the sum of ticket and concession revenue,should they raise ticket prices to $9?