...Practice Questions and Answers from Lesson I-4: Demand and Supply Practice Questions and Answers from Lesson I-4: Demand and Supply The following questions practice these skills: Describe when demand or supply increases (shifts right) or decreases (shifts left). Identify a competitive equilibrium of demand and supply. Describe the equilibrium shifts when demand or supply increases or decreases. Describe how prices or gross substitutes or gross complements shift demand. Describe how input costs or production costs shift supply. Aggregate individual demand into market demand. Describe how effective price ceilings cause shortages. Compute some special demand curves and some special supply curves from verbal descriptions. Question: A survey indicated that chocolate is Americans’ favorite ice cream flavor. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream. d. New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing...
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...Question One: If the demand for and supply of DVD players increased simultaneously, we could confidently predict an increase in the price of DVD players: | True | | | False | | Price will become indeterminate but quantity sold will increase. Please refer to page 60-61 of the textbook. Question Two: 'Because of unseasonably cold weather, the supply of oranges has substantially decreased.' This statement indicates that: | consumers will be willing and able to buy fewer oranges at each possible price | | | the equilibrium quantity of oranges will rise | | | the amount of oranges that will be available at various prices has declined | | | the price of oranges will fall | | The unseasonably cold weather has resulted in fewer oranges being supplied. The main factor is the unseasonal weather resulting in a decrease in supply shown by a leftward shift in the supply of oranges. Question Three: A decrease in the quantity of Mars bars demanded due to an increase in price involves: | a. a shift of the demand curve for Mars bars to the right | | | b. a shift of the demand curve for Mars bars to the left | | | c. a movement upward and to the left along the demand curve for Mars bars | | | d. a movement downward and to the right along the demand curve for Mars bars | | Supply and Demand shows that once the price rises of an object less of that object is demanded.. but once the price is lower more of the product is demanded...
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...Practice Questions and Answers from Lesson I-4: Demand and Supply Practice Questions and Answers from Lesson I-4: Demand and Supply The following questions practice these skills: Describe when demand or supply increases (shifts right) or decreases (shifts left). Identify a competitive equilibrium of demand and supply. Describe the equilibrium shifts when demand or supply increases or decreases. Describe how prices or gross substitutes or gross complements shift demand. Describe how input costs or production costs shift supply. Aggregate individual demand into market demand. Describe how effective price ceilings cause shortages. Compute some special demand curves and some special supply curves from verbal descriptions. Question: A survey indicated that chocolate is Americans’ favorite ice cream flavor. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream. d. New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing...
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...with research questions or thesis. Think what interests you in what we cover in the class. For example, o If you are interested in outsourcing, your research questions could be “Is the US better off or worse off because of the outsourcing to China?”. Then you go do a research on it. Find academic articles or news articles that support and/or against outsourcing. o You do research by reading those articles that you found and then combine the information you find into a unified paper that represents your fully formed expertise. The key to the whole thing is "combining," so as you do your research, look for facts and information that go well together and help explain (or disagree with) each other o You may start your introduction and research questions. Then start a second paragraph with a short explanation of what is “outsourcing” and state facts such as how many dollars or how many jobs the US outsourced to China in 2010. o The paper must show an analysis of a real world outsourcing situation such as what are the problems with the outsourcing, why there are the problems, how to fix the problems, what the pros and cons of each solution are, and how it will affect consumers who buy imported goods at Walmart or exporters to China. o Warning: You should have one or two research questions or more depending on your interest. If you only have one research question for your whole paper and that question is “what is...
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...Question : | Use the figure below to answer the following question: Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be: | | | Student Answer: | | 0F and 0C respectively. | | | | 0G and 0B respectively. | | | | 0F and 0A respectively. | | | | 0E and 0B respectively. | | | | Points Received: | 5 of 5 | | Comments: | | | | Question 2. | Question : | Which is included in the expenditures approach to GDP? | | | Student Answer: | | Spending on meals by consumers at restaurants | | | | Spending on used clothing by consumers at garage sales | | | | The monetary value of stocks and bonds owned by investors | | | | The monetary value of used trucks purchased by construction companies | | | | Points Received: | 5 of 5 | | Comments: | | | | Question 3. | Question : | A worker who loses a job at a call center because business firms switch the call center to another country is an example of: | | | Student Answer: | | Frictional unemployment | | | | Structural unemployment | | | | Cyclical unemployment | | | | Disguised unemployment | | | | Points Received: | 5 of 5 | | Comments: | | | | Question 4. | Question : | In calculating the unemployment rate, "discouraged"...
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...------------------------------------------------- Supply and demand The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product. Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an equilibrium of price and quantity. The four basic laws of supply and demand are:[1] 1. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity. 2. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity. 3. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity. 4. If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity. ------------------------------------------------- The graphical representation of supply and demand The supply-demand model is a partial equilibrium model representing the determination of the price of a particular good and the quantity of that...
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...C h a p t e r 4 ELASTICITY Topic: Calculating Elasticity Skill: Conceptual Price Elasticity of Demand 4) Topic: The Price Elasticity of Demand Skill: Conceptual 1) The slope of a demand curve depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure quantity but not the units used to measure price. D) neither the units used to measure price nor the units used to measure quantity. A) B) C) D) When the quantity of coal is measured in kilograms instead of pounds, the demand for coal becomes more elastic. less elastic. neither more nor less elastic. undefined. Answer: C Topic: Calculating Elasticity Skill: Recognition 5) The price elasticity of demand equals A) the change in the price divided by the change in quantity demanded. B) the change in the quantity demanded divided by the change in price. C) the percentage change in the price divided by the percentage change in the quantity demanded. D) the percentage change in the quantity demanded divided by the percentage change in the price. Answer: A Topic: The Price Elasticity of Demand Skill: Conceptual 2) The price elasticity of demand depends on A) the units used to measure price and the units used to measure quantity. B) the units used to measure price but not the units used to measure quantity. C) the units used to measure...
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...Designing and Managing the Supply Chain David Simchi-Levi Philip Kaminsky Edith Simchi-Levi Solutions for Discussion Questions1 Kerem B¨lb¨l u u 1 We would like to thank Shiming Deng for his valuable contributions to the preparation of this manual. Chapter 1 Introduction to Supply Chain Management Discussion Questions Question 1 Pick any car model manufactured by a domestic auto maker. For example, consider the 2002 Ford Thunderbird. a. The supply chain for a car typically includes the following components: 1. Suppliers for raw materials 2. Suppliers for parts and subsystems 3. Automobile manufacturer (Ford, in this example). Within a company, there are also different departments, which constitute the internal supply chain: i. Purchasing and material handing ii. Manufacturing iii. Marketing, etc. 4. Transportation providers 5. Automobile dealers b. Many Þrms are involved in the supply chain. 1. Raw material suppliers. For instance, suppliers for steel, rubber, plastics, etc. 2. Parts suppliers. For instance, suppliers for engines, steering wheels, seats, and electronic components, etc. 3. Automobile manufacturer. For instance, Ford. 4. Transportation providers. For instance, shippers, trucking companies, railroads, etc. 5. Automobile dealers. For example, Hayward Ford. c. All companies involved in the supply chain want to maximize their respective proÞts by increasing revenue and decreasing cost. However, companies may employ different 2 strategies in order...
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...Question 1 a. What is the distinction between a money price and a relative price? The value of the goods and services in terms of money is called money price and the value of goods and services in terms of other goods and services is called relative price. b. Explain why relative price is an opportunity cost? Relative price is the price of goods and services in comparison to another and opportunity cost is the best alternative you give up when you do something. Thus both rrelative price and opportunity cost of a commodity is calculated considering the cost of other alternatives. So, we can say relative price is an opportunity cost. c. Goods whose relative price has risen or fallen by a large amount in recent times. In Scotland there is rise of finance marked from £17.7 billion to 18.8 billion, a rise of 6% from a year earlier. But the traditional lending to business has fallen 2 % from 383 billion in 2014 to 375 this year. Question 2 a. Define the quantity demanded of a good or services. Quantity demanded of a goods and services is the quantity of a goods and services that people are willing to buy at a particular price at a particular point of time. b. What is the law of demand and how do we illustrate it? According to law of demand, other tings remaining constant, if the price of the commodity falls, the quantity demanded of it will rise and if the price of the commodity rises, its quantity demanded will decline. Thus, there is an inverse relationship...
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...based on midnight Central Time. In economics, they say a picture is worth a thousand words. Below, you will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions and how you got here in one or more graphs or flowcharts. Scenario One Supply and demand are foundational concepts in understanding economic theory. Whether you are a coffee drinker or not, you have been tasked to examine the impact of supply and demand when dealing with the coffee retail industry. A few companies probably come to mind. Pick a major coffee retailer, and then contemplate what has been happening to both the supply and demand for this product. Next, analyze the following scenario that deals with what happened in the coffee industry at the beginning of the last decade: In the early part of the last decade, there was an overproduction of coffee. The price dropped so low that producers' costs were higher than the market price. The reason this happened was that market prices became high before this, and the supply of coffee increased substantially. In the meantime, demand for coffee and everything else remained the same. Coffee prices, as a supply input, went down. In the meantime, gourmet coffee houses began appearing, which began charging a premium for coffee in the period of decreasing prices. Gourmet coffee houses tend to open in high-rent areas and cater to...
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...based on midnight Central Time. In economics, they say a picture is worth a thousand words. Below, you will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions and how you got here in one or more graphs or flowcharts. Scenario One Supply and demand are foundational concepts in understanding economic theory. Whether you are a coffee drinker or not, you have been tasked to examine the impact of supply and demand when dealing with the coffee retail industry. A few companies probably come to mind. Pick a major coffee retailer, and then contemplate what has been happening to both the supply and demand for this product. Next, analyze the following scenario that deals with what happened in the coffee industry at the beginning of the last decade: In the early part of the last decade, there was an overproduction of coffee. The price dropped so low that producers' costs were higher than the market price. The reason this happened was that market prices became high before this, and the supply of coffee increased substantially. In the meantime, demand for coffee and everything else remained the same. Coffee prices, as a supply input, went down. In the meantime, gourmet coffee houses began appearing, which began charging a premium for coffee in the period of decreasing prices. Gourmet coffee houses tend to open in high-rent areas and cater to...
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... Byford (2012). This version compiled on Thursday 6th December, 2012. Contents Using This Volume 1 Introduction to Demand and Supply 1.1 Quiz . . . . . . . . . . . . . . . . . . 1.2 Group Exercise . . . . . . . . . . . . 1.3 Homework Questions . . . . . . . . . 1.4 Homework Solutions . . . . . . . . . 2 Elasticity 2.1 Quiz . . . . . . . . . 2.2 Group Exercise . . . 2.3 Homework Questions 2.4 Homework Solutions iii 1 1 3 4 5 9 9 11 12 13 15 15 17 18 19 25 25 27 28 29 33 33 35 36 37 39 39 41 42 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Applications of Demand and Supply 3.1 Quiz . . . . . . . . . . . . . . . . . . 3.2 Group Exercise . . . . . . . . . . . . 3.3 Homework Questions . . . . . . . . . 3.4 Homework Solutions . . . . . . . . . 4 International Trade 4.1 Quiz . . . . . . . . . 4.2 Group Exercise . . . 4.3 Homework Questions 4.4 Homework Solutions 5 Market Failure 5.1 Quiz . . . . . . . . . 5.2 Group...
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...SS141 Macro-Economics Professor Patrick Yanez Study Questions for Chapter 3 - Set 2 These questions are to facilitate your discussion groups and/or tutoring sessions. Answers are listed at the end of this file. Since our class time is limited to introducing new topics, we do not have time to review these questions in class; please use your discussion group and/or tutoring session to review these questions. Use the following to answer questions 1-2: x Price S1 S2 y 0 1. Quantity A decrease in supply is depicted by a: A) move from point x to point y. B) shift from S1 to S2. C) shift from S2 to S1. D) move from point y to point x. 2. An increase in quantity supplied (as distinct from an increase in supply) is depicted by a: A) move from point y to point x. B) shift from S1 to S2. C) shift from S2 to S1. D) move from point x to point y. 3. The law of supply indicates that: A) producers will offer more of a product at high prices than they will at low prices. B) the product supply curve is downsloping. C) consumers will purchase less of a good at high prices than they will at low prices. D) producers will offer more of a product at low prices than they will at high prices. 4. The law of supply: A) reflects the amounts that producers will want to offer at each price in a series of prices. B) is reflected in a downsloping supply curve. C) shows that the relationship between producer revenue and quantity supplied is negative. Page 1 ...
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...ECN 104, Fall 2011 Some Review Questions for Midterm 1 (September 27, 2011, 8-11am, AMC 13) 1. A demand curve shows a relationship between (a) quantity demand and quantity supplied (b) income and price (c) price and quantity demanded (d) income and quantity demanded 2. The law of demand says that if the price of a good rises, (a) its quantity demanded falls (b) its quantity demanded rises (c) its quantity demanded may rise or fall (d) none of the above For questions 3-4, consider the market for a good consisting of two identical buyers 1 and 2, each having individual q = 10 − 2p. 3. When the price p equals 2, the market demand for this good is (a) 10 (b) 4 (c) 16 (d) 12 4. When the price p equals 6, the market demand for this good is (a) − 2 (b) − 4 (c) 0 (d) 12 For questions 5-6, consider the market for a good consisting of two identical buyers 1 and 2, each having individual q = 10 − p. 5. When the price p equals 2, the market demand for this good is (a) 10 (b) 4 (c) 16 (d) 12 6. When the price p equals 11, the market demand for this good is (a) − 2 (b) − 4 (c) 0 (d) 12 For questions 7-10, consider the market for a good consisting of two buyers 1 and 2. Buyer 1 has individual demand q1 = 10 − 2p and buyer 2 has individual demand q2 = 12 − p. 7. When the price p equals 6, the market demand for this good is (a) 13 (b) 8 (c) 6 (d) none of the above 8. When the price p equals 3, the market demand for this good is (a)13 (b) 8 (c) 6 (d) none of the above 9. When the price p equals...
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...Introduction Demand is a quantity of a good or service which consumers are willing and able to buy at a particular price in a certain period of time. This is known as effective demand. Supply is defined by price. If price is high then the quantity supplied will also be high. Is the price is low then the quantity supplied will be low. Market equilibrium is set by the market. It is decided by how much to producer is happy to supply the goods demanded at a common price for consumers. Question 1 The market which this report will look at is the Apple iPhone. The iPhone was first created in 2007 when Steve Jobs (Apple Inc Founder) introduced a wide screen iPod with touch screen controls and was able to be used as a mobile phone. Three determinants of demand which affect the iPhone are: Buyers Tastes and Preferences The tastes and preferences of a buyer may change because of personal preferences or advertising. If an advertising campaign is successful then the demand for the iPhone will increase as it has been made more appealing to consumers. Similarly an increase in the brands popularity will also cause the demand for the iPhone to rise. A Change in Income A change in consumers real income will also affect the demand for the iPhone. As smart phones are considered a ‘normal good’ and not a luxury, if income levels rise then the demand for normal goods will also rise. Advances in Technology After the release of the first iPhone in 2007 Apple realised their problems...
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