ECON103 Lecture Notes - Lecture 5: Technological Change, Demand Curve, Economic Equilibrium

50 views5 pages

lemonserval609

23 Feb 2017

School

University of Delaware

Department

Economics

Course

ECON103

Professor

Jens Schubert

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Chapter 3 where prices come from: the interaction of demand and suppl. 3. 1 the demand side of the market. 3. 2 the supply side of the market. 3. 4 the effect of demand and supply shifts on equilibrium. To analyze a market (e. g. market for oranges), we need a model how buyers and sellers behave. We assume perfectly competitive market, which is a market with: 1. No barriers to new firms to enter the market. Quantity demanded (qd) the amount of a good or service that a consumer is willing and able to buy at a given price. Market demand is the demand by all the consumers of a give good/service. Law of demand as p , qd and vice versa. A change in another variable (not price) that causes the entire demand curve to shift. A shift to the right (d1 to d2) is an increase in demand. A shift to the left (d1 to d3) is a decrease in demand.

Related Questions

1. If the price of a product decreases, we would expect:

a. Demand to increase

b. Quantity supplied to decrease

c. Supply to decrease

d. Quantity supplied to increase

2. "Price" in the statement of the Law of Supply refers to:

a. The amount that buyers are willing and able to pay for each unit of the product.

b. Marginal cost of producing the last unit of the product.

c. The total revenues that sellers receive for selling a given quantity of the product.

d. The total amount that buyers pay to acquire a given quantity of the product.

3. A decrease in demand and an increase in supply will:

a. Affect price in an indeterminate way and decrease the equilibrium quantity

b. Increase the price and affect the equilibrium quantity in an indeterminate way

c. Decrease price and affect the equilibrium quantity in an indeterminate way

d. Increase the price and increase the equilibrium quantity

4. When producers (say, of roads) are not able to make all consumers pay for enjoying their product (i.e., the roads), they tend to see:

a. The marginal cost of production is too low, and there is a supply-side market failure

b. The marginal benefit of production is too high, and there is a demand-side market failure

c. The marginal cost of production is too high, and there is a supply-side market failure

d. The marginal benefit of production that is too low, and there is a demand-side market failure

peachcrow879

7. Effect of a tax on buyers and sellers

The following graph shows the daily market for wine. Suppose the government institutes a tax of $23.20 per bottle. This places a wedge between the price buyers pay and the price sellers receive.

Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.

Quantity(bottles of wine) Price buyers pay(Dollars per bottle) Price sellers receive(Dollars per bottle)

Before tax

After tax

Using the data entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. enter your results in the following table.

Tax burden(Dollars per bottle) Elasticity

Buyers

Sellers

The burden of the tax falls more heavily on the ..........elastic side of the market.

champagnehippopotamus285

1 an imperfect market, individual firms

A.are always able to set the price of their product.

B.are able to influence the price of their product.

C.have no influence over the price of their product.

D.take the market price as given.

1 Which of the following is NOT characteristic of a market economy?

Significant government intervention

Little or no government intervention

Buyers and sellers motivated by self-interest

Prices determined by demand and supply

2 In a competitive market, the price of the product is

independently set by each competing seller.

set by the market leader and then copied by other sellers.

jointly set after a meeting of all sellers in the market.

set by market supply and demand.

3 Which of the following firms participates in a competitive market?

A new car manufacturer, such as Ford, Honda, Toyota, or GMC

A software producer, such as Microsoft

A corn farmer

A local electric utility company

4 In an imperfect market, individual firms

are always able to set the price of their product.

are able to influence the price of their product.

have no influence over the price of their product.

take the market price as given.

5 Which of the following firms operates as a monopoly?

A car manufacturer

A local water utility

A corn farmer

A fish vendor at a neighborhood market

6 According to the law of demand, what is the relationship between price and quantity demanded?

Direct

No relationship

Inverse

7 Refer to the following graph. The demand curve slopes downward because
Click to view graphic. (Links to an external site.)

prices and quantity demanded move in opposite directions.

prices and quantity demanded move in the same direction.

prices and quantity demanded have no relationship.

prices and quantity demanded remain unchanged.

8 A change in which of the following will cause a change in the quantity demanded of coffee?

Consumer income

The price of green tea, a substitute for coffee

The number of coffee consumers

The price of coffee

9 Suppose that burgers and fries are complements in consumption. If the price of fries increases

overall demand for burgers will increase.

overall demand for burgers will decrease.

quantity demanded for burgers will increase.

quantity demanded for burgers will decrease.

10 Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then

both the equilibrium price and the quantity of Pepsi demanded will decrease.

both the equilibrium price and the quantity of Pepsi demanded will increase.

the equilibrium price of Pepsi will increase and the quantity demanded of Pepsi will decrease.

the equilibrium price of Pepsi will decrease and the quantity demanded of Pepsi will increase.

11 According to the law of supply, what is the relationship between price and quantity supplied?

Direct

No relationship

Inverse

It depends on the change in price

12 Refer to the graph below. The supply curve is _______________ driven by the law of supply.
Click to view graphic. (Links to an external site.)

13 A change in which of the following will cause a change in the quantity supplied of coffee?

The technology or the production process of making coffee

Anticipation of a change in the price of coffee

The wages of coffee bean pickers

The price of coffee

14 Which of the following will cause a rightward shift in the supply curve for tobacco?

A fall in the number of tobacco farmers in the market

An increase in taxes on tobacco

Removal of government subsidies to tobacco farmers

An improvement in the technology used in the production of tobacco

15 Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?

Overall supply will increase

Overall supply will decrease

Quantity supplied will increase

Quantity supplied will decrease

16 Refer to the following image. When a market is in equilibrium, which of the following is true?
Click to view graphic. (Links to an external site.)

Quantity supplied exceeds quantity demanded

Quantity supplied is less than quantity demanded

Quantity supplied is equal to quantity demanded

There is no relationship between quantity supplied and quantity demanded

17 Refer to the following figure. At a price of $15, this market is experiencing a(n)
Click to view graphic. (Links to an external site.)

equilibrium.

shortage.

surplus.

none of the above are true.

18 Refer to the following figure. At a price of $5, this market is experiencing
Click to view graphic. (Links to an external site.)

equilibrium.

a shortage.

a surplus.

None of the above are true.

19 Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the

equilibrium quantity and equilibrium price of pasta salad will increase.

equilibrium quantity of pasta salad will decrease and the equilibrium price of pasta salad may either increase or decrease.

equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.

equilibrium quantity and equilibrium price of pasta salad will both decrease.

20. What must happen to the market price in order for a shortage to be eliminated?

Price must fall.

Price must rise.

Price must stay the same.

Price may rise or fall depending on the size of the shortage.

ECON103 Lecture Notes - Lecture 5: Technological Change, Demand Curve, Economic Equilibrium

Document Summary

Get access

Related Documents

ECON103 Chapter Notes - Chapter 3: Yankee, Inferior Good, Opportunity Cost

ECON103 Lecture Notes - Lecture 3: Demand Curve, Invisible Hand, Market Power

ECON103 Study Guide - Midterm Guide: Net Domestic Product, Peanut Butter And Jelly Sandwich, Demand Curve

Related Questions