2. Study Questions and Problems #2Ais the one and only producer in a market, while amarket. Due in large part to these characteristics, ais one of many producers in afaces a horizontal demand curve, and afaces a downward-sloping demand curve.Grade It NowSave & Continue Attenteperfectly competitive firmmonopolistAverage 1blems #2is the one and only producer in a market, while amarket. Due in large part to these characteristics, afaces a downward-sloping demand curve.is one of many producers in afaces a horizontal demand curve, and a

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. If we assume that Coke and Pepsi are substitute products, what would happen to the supply and demand for Pepsi if Pepsi raised their price? What would happen to the supply and demand for Coke if Pepsi raised their price? (Be sure to think about what consumers would do and what effect their behavior has on demand. Then think about in the long run what the companies would do to adjust to any changes in demand) 2. In the United States, oranges are grown primarily in Florida and California. Imagine if there is a freeze in Florida that destroys 20% of the orange crop. What would happen to the market for Florida oranges? How would the California orange market change?
1. Which of the following is true of any market? a. The interaction of demand and supply determines the price and quantity in that market. b. There must be a supply of the item but not necessarily a demand for the item. c. Demand and supply are always equal for an item. d. There must be a demand for the item but not necessarily a supply of the item. e. The market will always be in equilibrium 2. During the fall of 2015, many vacationers on cruise liners became ill while on board their ships. Consequently, there was a a. Decrease in the quantity demanded of cruise vacations but no change in the demand for cruise vacations. b. Decrease in the demand for cruise vacations. c. Increase in the quantity supplied of cruise vacations but no change in the supply of cruise vacations. d. Increase in the supply of cruise vacations. 3. Which of the following statements is false? a. As more buyers enter the market, the market demand curve shifts to the right. b. As income falls, the…
QUESTION 21 When a product becomes more fashionable, what does happen in the market? a. Total surplus increases. b. Consumer surplus decreases. c. Producer surplus decreases. d. All of the above decrease.
5. Darnell owns a water pump. Because pumping large amounts of water is harder than pumping small amounts, the cost of producing a bottle of water rises as he pumps more, Here is the cost he incurs to produce each bottle of water: Cost of first bottle: $1 Cost of second bottle: $4 Cost of third bottle: $7 Cost of fourth bottle: $9 From this information, complete the following table by denving Darne/'s supply schedule. Price Quantity Supplied More than $9 $7 to $9 $4 to $7 $1 to $4 $1 or less
7. A shift in the supply curve of bicycles resulting from higher metal prices will lead to higher prices lower prices a shift in the demand curve larger output a. b C. d.
3. Demand and supply of cigarettes in California are: Supply: Qs = 2Ps + 20 Demand: QD = 200 – PD Calculate the market equilibrium price and quantity, assuming perfect competition. a. b. California decides to tax on cigarettes to fund preschool. It recognizes that a secondary benefit of the tax would be to reduce teen smoking. Suppose taxes of $15 per carton are placed on the consumption of cigarettes. By how much will the tax increase the price consumers pay? By how much will it decrease the price producers receive?
9. The state of Minnesota rations camping sites on a first come, first served system. This has led to what America did during World War II. Venezuela to distribute food which is to what Minnesota does to and is a. An increase in the demand for camping sites and a decrease in supply; not similar; relies; prices; similar b. A surplus of camping sites and downward pressure on prices; similar to; does not rely; non-price rationing; similar I The state failing to maximize revenue from this shortage-creating system; similar to; does not rely; prices; similar d. The opportunity cost of wasted time for many would-be campers; similar to; refuses to rely; the invisible hand; similar C and D only. C. on with camping sites. e.
1. Use the market model of supply and demand to illustrate and explain the impact of the following events on the market for coffee. Make sure to identify which side(s) of the market is impacted, explain why it is impacted, how it is impacted, and the overall impact on the equilibrium price and quantity. a) The price of tea goes up by 100 percent. b) A study is released that links consumption of caffeine to increased incidence of cancer. c) Workers in the coffee industry unionize and negotiate higher wages.
Suppose oil prices rise sharply for years as a result of a war in the Persian gulf region. What happens and why to the demand for a. Cars? b. Home insulation? c. Coal? d. Tires?
6. Raleigh and Austin are a young couple, and the only people in their family. Raleigh's monthly demand for pints of ice cream is given by QD=20 - P and Austin's monthly demand for pints of ice cream is given by QD=10-2 P. a. Graph their family demand curve for ice cream. b. Calculate how many pints of ice cream their family buys when P = 10 and when P=4. I
4. Which of the following is true of equilibrium in a purely (or perfectly) competitive market for good X? (A) A shortage of good X exists. (B) The quantity demanded equals the quantity supplied of good X. (C) A surplus of good X exists. (D) The government regulates the quantity of good X produced at the market price. (E) Dead weight loss exists.
4. The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name “Y. ”Good Y is an inferior good. Is good Y a lower-quality product than good X ? * a. Yes b. No 5. Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X if the price of input A increases. * a. Increase b. Decrease c. None of the above 6. Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X if an excise tax of P 1 is imposed on good X . * a. Increase b. Decrease c. None of the above

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