Homework Answers
When the manufacturing
increases, the supply will increase which increases the quantity
and decreases the price so earlier consumer surplus was area A
which increases by area B+C+D
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11. The manufacturing technology of smart phones has improved. Illustrate what happens in a supply and...
Total economic surplus. The following diagram shows supply and demand in the market for smart phones....
Total economic surplus.
The following diagram shows supply and demand in the market for
smart phones.
Use the black point (plus symbol) to indicate the equilibrium
price and quantity of smart phones. Then use the green point
(triangle symbol) to fill the area representing consumer surplus,
and use the purple point (diamond symbol) to fill the area
representing producer surplus.
Total surplus in this market is ($
)million.
150 135 Demand Equilibrium 120 105 5 90 2 75 Consumer Surplus...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What factors are taken as constant when plotting a demand curve? b. What happens to a demand curve if the income of the consumers increases? c. What happens to a demand curve for a product if the price of a substitute product increases? (Hint: Margarine and butter are substitute good. What would happen to the demand curve for margarine if the price of butter increases?)...
The cost of many electronic devices has fallen appreciably since they were first introduced. For instance,...
The cost of many electronic devices has fallen appreciably since they were first introduced. For instance, computers, mobile phones, microwave ovens and calculators not only provide more functions but also do so at a lower cost. Illustrate the impact of lower production costs on the supply curve. What happens to the size of the consumer surplus and producer surplus? If consumer demand for mobile phones is relatively elastic, who is likely to benefit the most from the lower production costs?
1. If demand deceases and supply remains constant, what happens to the market equilibrium? A. Quantity...
1. If demand deceases and supply remains constant, what happens to the market equilibrium? A. Quantity and price both rise. B. neither price or quantity will change C. Quantity and price both fall. D. Quantity rises and price falls. 2. A positive statement is A. an opinion B. a value judgement. C. can be shown to be correct or incorrect. D. based upon what can be demonstrated to be true. 3. If a technology change reduces a company's production costs,...
2. EXERCISE 8.4 SURPLUS AND DEADWEIGHT LOSs 1. Sketch a diagram to illustrate the competitive market...
2. EXERCISE 8.4 SURPLUS AND DEADWEIGHT LOSs 1. Sketch a diagram to illustrate the competitive market for bread, showing the equilibrium where 5,000 loaves are sold at a price of 2.00. 2. Suppose that the bakeries get together to form a cartel. They agree to raise the price to 2.70, and jointly cut production to supply the number of loaves that consumers demand at that price. Shade the areas on your diagram to show the consumer surplus, producer surplus, and...
only letter e and f 18. Graphically illustrate the market for a good in competitive equilibrium...
only letter e and f
18. Graphically illustrate the market for a good in competitive equilibrium (be sure to label S. D, P. and O) Shade and label the areas that measure consumer surplus, producer surplus, and deadweight loss (if there is any DWL). a. Is this market efficient? Why? b. Now assume that the market price falls below the equilibrium price (NOT as a result of a change in supply or demand). Redraw your graph below and illustrate this...
1. Consider the market for cars. Explain what will happen to the supply of cars if...
1. Consider the market for cars. Explain what will happen to the supply of cars if there is an improvement in car manufacturing technology. How does price, quantity, producer surplus, and consumer surplus get affected (increase or decrease)? Do we know for sure if producer surplus will increase or decrease? Now assume that the city builds new bike paths and increases the demand for biking, what will happen to the demand for cars? What happens to the price and quantity...
Supply & Demand, Equilibrium, and Surplus 1. Consider a specific market for smart phone plans (not...
Supply & Demand, Equilibrium, and Surplus 1. Consider a specific market for smart phone plans (not the phones) in a small town. Here are the conditions: Q = 50 – 0.5 * P Q = –25 + P a. Is the first one the supply or demand curve? How can you tell? (hint: solve for P first) b. At what price will the market be in equilibrium? How many transactions (quantity) will take place? c. If the current price is...
If the Federal Reserve Bank purchases a large stock of bonds, what happens to money supply?...
If the Federal Reserve Bank purchases a large stock of bonds, what happens to money supply? Explain. Use the money market diagram (money demand-money supply diagram) to illustrate the effects of such an intervention on the equilibrium interest rate. Why does the interest rate change (increase or decrease) following the bond purchase by the Fed?
11. Total welfare The following graph shows supply and demand in the market for smartphones Use...
11. Total welfare The following graph shows supply and demand in the market for smartphones Use the black point (cross symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus 250 Demand 225 Equilbrium 200 175 Consumer Surplus 150 125 Producer Surplus 100 75 50 25 Supply 0 280 350 175 210...
Total economic surplus.
The following diagram shows supply and demand in the market for
smart phones.
Use the black point (plus symbol) to indicate the equilibrium
price and quantity of smart phones. Then use the green point
(triangle symbol) to fill the area representing consumer surplus,
and use the purple point (diamond symbol) to fill the area
representing producer surplus.
Total surplus in this market is ($
)million.
150 135 Demand Equilibrium 120 105 5 90 2 75 Consumer Surplus...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What factors are taken as constant when plotting a demand curve? b. What happens to a demand curve if the income of the consumers increases? c. What happens to a demand curve for a product if the price of a substitute product increases? (Hint: Margarine and butter are substitute good. What would happen to the demand curve for margarine if the price of butter increases?)...
2. EXERCISE 8.4 SURPLUS AND DEADWEIGHT LOSs 1. Sketch a diagram to illustrate the competitive market for bread, showing the equilibrium where 5,000 loaves are sold at a price of 2.00. 2. Suppose that the bakeries get together to form a cartel. They agree to raise the price to 2.70, and jointly cut production to supply the number of loaves that consumers demand at that price. Shade the areas on your diagram to show the consumer surplus, producer surplus, and...
only letter e and f
18. Graphically illustrate the market for a good in competitive equilibrium (be sure to label S. D, P. and O) Shade and label the areas that measure consumer surplus, producer surplus, and deadweight loss (if there is any DWL). a. Is this market efficient? Why? b. Now assume that the market price falls below the equilibrium price (NOT as a result of a change in supply or demand). Redraw your graph below and illustrate this...
Supply & Demand, Equilibrium, and Surplus 1. Consider a specific market for smart phone plans (not the phones) in a small town. Here are the conditions: Q = 50 – 0.5 * P Q = –25 + P a. Is the first one the supply or demand curve? How can you tell? (hint: solve for P first) b. At what price will the market be in equilibrium? How many transactions (quantity) will take place? c. If the current price is...
11. Total welfare The following graph shows supply and demand in the market for smartphones Use the black point (cross symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus 250 Demand 225 Equilbrium 200 175 Consumer Surplus 150 125 Producer Surplus 100 75 50 25 Supply 0 280 350 175 210...
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