All Related Questions of Demand Curve

Q: A subsidy is the opposite of a tax. With a $

A subsidy is the opposite of a tax. With a $0.50 tax on the buyers of ice-cream cones, the government collects $0.50 for each cone purchased; with a $0.50 subsidy for the buyers of ice-cream cones, th...

Q: What are the demand schedule and the demand curve, and how

What are the demand schedule and the demand curve, and how are they related? Why does the demand curve slope downward?

Q: Does a change in consumers’ tastes lead to a movement along the

Does a change in consumers’ tastes lead to a movement along the demand curve or a shift in the demand curve? Does a change in price lead to a movement along the demand curve or a shift in the demand c...

Q: Maria has decided always to spend one-third of her income

Maria has decided always to spend one-third of her income on clothing. a. What is her income elasticity of clothing demand? b. What is her price elasticity of clothing demand? c. If Maria’s tastes cha...

Q: Larry, Curly, and Moe run the only saloon in town

Larry, Curly, and Moe run the only saloon in town. Larry wants to sell as many drinks as possible without losing money. Curly wants the saloon to bring in as much revenue as possible. Moe wants to mak...

Q: Consider the relationship between monopoly pricing and price elasticity of demand.

Consider the relationship between monopoly pricing and price elasticity of demand. a. Explain why a monopolist will never produce a quantity at which the demand curve is inelastic. (Hint: If demand is...

Q: It is a hot day, and Bert is thirsty. Here

It is a hot day, and Bert is thirsty. Here is the value he places on each bottle of water: Value of first bottle $7 Value of second bottle $5 Value of third bottle $3 Value of fourth bottle $1 a. From...

Q: A friend of yours is considering two cell phone service providers.

A friend of yours is considering two cell phone service providers. Provider A charges $120 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed serv...

Q: Consider how health insurance affects the quantity of healthcare services performed.

Consider how health insurance affects the quantity of healthcare services performed. Suppose that the typical medical procedure has a cost of $100, yet a person with health insurance pays only $20 out...

Q: Explain how buyers’ willingness to pay, consumer surplus, and the

Explain how buyers’ willingness to pay, consumer surplus, and the demand curve are related.

Q: Draw a demand curve for turkey. In your diagram, show

Draw a demand curve for turkey. In your diagram, show a price of turkey and the consumer surplus at that price. Explain in words what this consumer surplus measures.

Q: The market for pizza is characterized by a downward sloping demand curve

The market for pizza is characterized by a downward sloping demand curve and an upward-sloping supply curve. a. Draw the competitive market equilibrium. Label the price, quantity, consumer surplus, an...

Q: Figure 4 shows that for any given demand curve for the right

Figure 4 shows that for any given demand curve for the right to pollute, the government can achieve the same outcome either by setting a price with a corrective tax or by setting a quantity with pollu...

Q: Sleek Sneakers Co. is one of many firms in the market

Sleek Sneakers Co. is one of many firms in the market for shoes. a. Assume that Sleek is currently earning short-run economic profit. On a correctly labeled diagram, show Sleek’s profit-maximizing out...

Q: A college student has two options for meals: eating at the

A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a Cup O’ Soup for $1.50 per meal. Her weekly food budget is $60. a. Draw the budget constraint showing...

Q: Draw the supply curve and the demand curve for a labor market

Draw the supply curve and the demand curve for a labor market in which the wage is fixed above the equilibrium level. Show the quantity of labor supplied, the quantity demanded, and the amount of unem...

Q: Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits

Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Let’s consider the effects of such a policy on the labor m...

Q: Suppose that labor is the only input used by a perfectly competitive

Suppose that labor is the only input used by a perfectly competitive firm. The firm’s production function is as follows: Days of Labor ………………………………….Units of Output0 days 0 units 1 …………………………….………………...

Q: Suppose there are three buyers of candy in a market: Tex

Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below. a. Fill in the table...

Q: What are the determinants of demand? What happens to the demand

What are the determinants of demand? What happens to the demand curve when any of these determinants change? Distinguish between a change in demand and a movement along a fixed demand curve, noting th...

Q: True or False: A “change in quantity demanded” is

True or False: A “change in quantity demanded” is a shift of the entire demand curve to the right or to the left.

Q: Assume that candle wax is traded in a perfectly competitive market in

Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers’ full willingness to pay while the supply curve reflects all production costs. For each of...

Q: Explain the law of demand. Why does a demand curve slope

Explain the law of demand. Why does a demand curve slope downward? How a market demand curve is derived from individual demand curves?

Q: Refer to Figure 3.6, page 63. Assume that

Refer to Figure 3.6, page 63. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of $1, $2, $3,...

Q: In the taste-for-discrimination model, an increase in

In the taste-for-discrimination model, an increase in employer prejudice against African-American workers would cause the discrimination coefficient to and the demand curve for African-American labor...

Q: Faceblock, Gargle+, and MyMace are rival firms in an oligopoly

Faceblock, Gargle+, and MyMace are rival firms in an oligopoly industry. If kinked-demand theory applies to these three firms, Faceblock’s demand curve will be: a. More elastic above the current pric...

Q: Suppose that marginal product tripled while product price fell by one-

Suppose that marginal product tripled while product price fell by one-half in Table 16.1. What would be the new MRP values in Table 16.1? What would be the net impact on the location of the resource d...

Q: Complete the following labor demand table for a firm that is hiring

Complete the following labor demand table for a firm that is hiring labor competitively and selling its product in a competitive market. a. How many workers will the firm hire if the market wage rate...

Q: Suppose the equation for the demand curve for some product X is

Suppose the equation for the demand curve for some product X is P = 8 - .6Q and the supply curve is P = 2 + .4Q. What are the equilibrium price and quantity? Now suppose an excise tax is imposed on X...

Q: A firm uses both labor and machines in production. Explain why

A firm uses both labor and machines in production. Explain why an increase in the average wage rate causes both a movement along the labor demand curve and a shift of the curve.

Q: Consider a firm with monopoly power that faces the demand curve

Consider a firm with monopoly power that faces the demand curve P = 100 – 3Q + 4A1/2 and has the total cost function C = 4Q2 + 10Q + A where A is the level of advertising expenditures, and P and Q a...

Q: Reconsider the common resource problem given in Example 18.7 given

Reconsider the common resource problem given in Example 18.7 given blow. Suppose that crawfish popularity continues to increase, and that the demand curve shifts from C = 0.401 – 0.0...

Q: The following table shows the demand curve facing a monopolist who produces

The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $10: Price…….……………………………………………………………Quantity 18………………………………………………………………………………...0 16..…………………...

Q: Suppose that an industry is characterized as follows: C =

Suppose that an industry is characterized as follows: C = 100 + 2q2………….each firm’s total cost function MC = 4q………………..firm’s marginal cost function P = 90 – 2Q…………… industry demand curve MR = 90...

Q: A monopolist faces the demand curve P = 11 – Q,

A monopolist faces the demand curve P = 11 – Q, where P is measured in dollars per unit and Q in thousands of units. The monopolist has a constant average cost of $6 per unit. a. Draw the average and...

Q: Show why optimal, third-degree price discrimination requires that marginal

Show why optimal, third-degree price discrimination requires that marginal revenue for each group of consumers equals marginal cost. Use this condition to explain how a firm should change its prices a...

Q: The House Products Division of Acme Corporation manufactures and sells digital clock

The House Products Division of Acme Corporation manufactures and sells digital clock radios. A major component is supplied by the electronics division of Acme. The cost functions for the radio and the...

Q: Suppose that two competing firms, A and B, produce a

Suppose that two competing firms, A and B, produce a homogeneous good. Both firms have a marginal cost of MC = $50. Describe what would happen to output and price in each of the following situations i...

Q: Suppose the airline industry consisted of only two firms: American and

Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) = 40q. Assume the demand curve for the industry is given by...

Q: The dominant firm model can help us understand the behavior of some

The dominant firm model can help us understand the behavior of some cartels. Let’s apply this model to the OPEC oil cartel. We will use isoelastic curves to describe world demand W a...

Q: Consider two firms facing the demand curve P = 50 – 5Q

Consider two firms facing the demand curve P = 50 – 5Q, where Q = Q1 + Q2. The firms’ cost functions are C1(Q1) = 20 + 10Q1 and C2(Q2) = 10 + 12Q2. a. Suppose both firms have entered the industry. Wh...

Q: A monopolist can produce at a constant average (and marginal)

A monopolist can produce at a constant average (and marginal) cost of AC = MC = $5. It faces a market demand curve given by Q = 53 – P. a. Calculate the profit-maximizing price and quantity for this...

Q: This exercise is a continuation of Exercise 3. We return to

This exercise is a continuation of Exercise 3. We return to two firms with the same constant average and marginal cost, AC = MC = 5, facing the market demand curve Q1 + Q2 = 53 – P. Now we will use th...

Q: Two firms compete in selling identical widgets. They choose their output

Two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve P = 30 – Q where Q = Q1 + Q2. Until recently, both firms had zero ma...

Q: The kinked demand curve describes price rigidity. Explain how the model

The kinked demand curve describes price rigidity. Explain how the model works. What are its limitations? Why does price rigidity occur in oligopolistic markets?

Q: Why is the firm’s demand curve flatter than the total market demand

Why is the firm’s demand curve flatter than the total market demand curve in monopolistic competition? Suppose a monopolistically competitive firm is making a profit in the short run. What will happen...

Q: Elizabeth Airlines (EA) flies only one route: Chicago-

Elizabeth Airlines (EA) flies only one route: Chicago-Honolulu. The demand for each flight is Q = 500 – P. EA’s cost of running each flight is $30,000 plus $100 per passenger. a. What is the profit-m...

Q: You are a duopolist producer of a homogeneous good. Both you

You are a duopolist producer of a homogeneous good. Both you and your competitor have zero marginal costs. The market demand curve is P = 30 ! Q where Q = Q1 + Q2. Q1 is your output and Q2 your compe...

Q: Explain the difference between each of the following terms:

Explain the difference between each of the following terms: a.a price consumption curve and a demand curve b.an individual demand curve and a market demand curve c.an Engel curve and a demand curve d....

Q: An individual sets aside a certain amount of his income per

An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books.Given the information below, illustrate both the price-consumption c...

Q: You run a small business and would like to predict what

You run a small business and would like to predict what will happen to the quantity demanded for your product if you raise your price.While you do not know the exact demand curve for your product, you...

Q: The table below shows the retail price and sales for instant

The table below shows the retail price and sales for instant coffee and roasted coffee for 1997 and 1998. a.Using these data alone, estimate the short-run price elasticity of demand for roasted coffe...

Q: Suppose the demand curve for a product is given by Q

Suppose the demand curve for a product is given by Q = 10 − 2P + PS, where P is the price of the product and PS is the price of a substitute good.The price of the substitute good is $2.00. a.Suppose...

Q: In Example 2.8 below we examined the effect of

In Example 2.8 below we examined the effect of a 20-percent decline in copper demand on the price of copper, using the linear supply and demand curves developed in Section 2.6. Suppose the long-run pr...

Q: Refer to Example 2.5 (below) on the

Refer to Example 2.5 (below) on the market for wheat.In 1998, the total demand for U.S. wheat was Q = 3244 – 283P and the domestic supply was QS = 1944 + 207P.At the end of 1998, bot...

Q: In Exercise 4 in Chapter 2 we examined a vegetable fiber

In Exercise 4 in Chapter 2 we examined a vegetable fiber traded in a competitive world market and imported into the United States at a world price of $9 per pound. U.S. domestic supply and demand for...

Q: Suppose a competitive industry faces an increase in demand (i

Suppose a competitive industry faces an increase in demand (i.e., the demand curve shifts upward).What are the steps by which a competitive market insures increased output?Will your answer change if t...

Q: Suppose that unusually hot weather causes the demand curve for ice

Suppose that unusually hot weather causes the demand curve for ice cream to shift to the right.Why will the price of ice cream rise to a new market-clearing level?

Q: The United States currently imports all of its coffee.The

The United States currently imports all of its coffee.The annual demand for coffee by U.S. consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions of pounds) and P is th...

Q: Suppose you are in charge of a toll bridge that costs

Suppose you are in charge of a toll bridge that costs essentially nothing to operate.The demand for bridge crossings Q is given by P=15− 1/2 Q. a.Draw the demand curve for bridge crossings. b.How man...

Q: Two individuals, Sam and Barb, derive utility from the

Two individuals, Sam and Barb, derive utility from the hours of leisure (L) they consume and from the amount of goods (G) they consume.In order to maximize utility, they need to allocate the 24 hours...

Q: Suppose the demand curve for a product is given by Q

Suppose the demand curve for a product is given by Q = 300 – 2P + 4I, where I is average income measured in thousands of dollars.The supply curve is Q = 3P – 50. a.If I = 25, find the market clearing...

Q: Which of the following events would cause a movement along the

Which of the following events would cause a movement along the demand curve for U.S. produced clothing, and which would cause a shift in the demand curve? a. the removal of quotas on the importation...

Q: Serviflow manufactures products that move and measure various fluids, ranging from

Serviflow manufactures products that move and measure various fluids, ranging from water to high viscosity polymers, corrosive or abrasive chemicals, toxic substances, and other difficult pump in medi...

Q: Pebble Beach Sandals has designed and patented a luxury golf sandal for

Pebble Beach Sandals has designed and patented a luxury golf sandal for both men and women. The unique handmade designs include spikes and cleats to prevent the golfer from slipping during the swing....

Q: Digital Convert (DC) is a three-year-old

Digital Convert (DC) is a three-year-old start-up company with most of its capital coming from banks and personal investments by the founders. DC manufactures a high-resolution scanner (MXP35) for pro...

Q: Why does the aggregate demand curve sloped downward?

Why does the aggregate demand curve sloped downward?

Q: Consider the economy of Hicksonia. a. The consumption function

Consider the economy of Hicksonia. a. The consumption function is given by C = 300 + 0.6(Y - T).The investment function is I = 700 - 80r. Government purchases and taxes are both 500. For this economy,...

Q: Explain why the aggregate demand curve slopes downward.

Explain why the aggregate demand curve slopes downward.

Q: This problem asks you to analyze the IS–LM model algebraically

This problem asks you to analyze the IS–LM model algebraically. Suppose consumption is a linear function of disposable income: C(Y - T ) = a + b(Y - T ), where a> 0 and 0 < b < 1. The parameter b is t...

Q: When the government subsidizes investment, such as with an investment tax

When the government subsidizes investment, such as with an investment tax credit, the subsidy often applies to only some types of investment. This question asks you to consider the effect of such a ch...

Q: Movie tickets and film streaming services are substitutes. If the price

Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets? a. The supply curve shifts to the left. b. The suppl...

Q: Does a change in consumers’ tastes lead to a movement along the

Does a change in consumers’ tastes lead to a movement along the demand curve or to a shift in the demand curve? Does a change in price lead to a movement along the demand curve or to a shift in the de...

Q: A change in which of the following will NOT shift the demand curve

A change in which of the following will NOT shift the demand curve for hamburgers? a. the price of hot dogs b. the price of hamburgers c. the price of hamburger buns d. the income of hamburger consume...

Q: A linear, downward-sloping demand curve is a.

A linear, downward-sloping demand curve is a. inelastic b. unit elastic. c. elastic. d. inelastic at some points, and elastic at others.

Q: Eggs have a supply curve that is linear and upward-sloping

Eggs have a supply curve that is linear and upward-sloping and a demand curve that is linear and downward-sloping. If a 2 cent per egg tax is increased to 3 cents, the deadweight loss of the tax a. i...

Q: Harry’s income declines, and as a result, he buys more

Harry’s income declines, and as a result, he buys more pumpkin juice. Is pumpkin juice an inferior or a nor- mal good? What happens to Harry’s demand curve for pumpkin juice?

Q: The ability of firms to enter and exit a market over time

The ability of firms to enter and exit a market over time means that, in the long run, a. the demand curve is more elastic. b. the demand curve is less elastic. c. the supply curve is more elastic. d....

Q: A price change causes the quantity demanded of a good to decrease

A price change causes the quantity demanded of a good to decrease by 30 percent, while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic? Explain.

Q: It is a hot day, and Bert is thirsty. Here

It is a hot day, and Bert is thirsty. Here is the value he places on each bottle of water: Value of first bottle $7 Value of second bottle $5 Value of third bottle $3 Value of fourth bottle $1 a. Fro...

Q: An increase in the supply of a good will decrease the total

An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supp...

Q: When the government imposes a binding price floor, it causes

When the government imposes a binding price floor, it causes a. the supply curve to shift to the left. b. the demand curve to shift to the right. c. a shortage of the good to develop. d. a surplus of...

Q: Explain how buyers’ willingness to pay, consumer surplus, and the

Explain how buyers’ willingness to pay, consumer surplus, and the demand curve are related.

Q: Draw a demand curve for turkey. In your diagram, show

Draw a demand curve for turkey. In your diagram, show a price of turkey and the consumer surplus at that price. Explain in words what this consumer surplus measures.

Q: The market for pizza is characterized by a downward-sloping demand

The market for pizza is characterized by a downward-sloping demand curve and an upward-sloping supply curve. a. Draw the competitive market equilibrium. Label the price, quantity, consumer surplus, an...

Q: A friend of yours is considering two cell phone service providers.

A friend of yours is considering two cell phone service providers. Provider A charges $120 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed serv...

Q: Consider how health insurance affects the quantity of healthcare services performed.

Consider how health insurance affects the quantity of healthcare services performed. Suppose that the typical medical procedure has a cost of $100, yet a person with health insurance pays only $20 out...

Q: What are the demand schedule and the demand curve, and how

What are the demand schedule and the demand curve, and how are they related? Why does the demand curve slope downward?

Q: The demand curve for cookies is downward-sloping. When the

The demand curve for cookies is downward-sloping. When the price of cookies is $2, the quantity demanded is 100. If the price rises to $3, what happens to consumer surplus? a. It falls by less than $1...

Q: Draw a demand and supply graph to show the effect on the

Draw a demand and supply graph to show the effect on the equilibrium price in a market in the following situations. a. The demand curve shifts to the right. b. The supply curve shifts to the left.

Q: If, over time, the demand curve for a product shifts

If, over time, the demand curve for a product shifts to the right more than the supply curve does, what will happen to the equilibrium price? What will happen to the equilibrium price if the supply cu...

Q: In the fall of 2006, Pace University in New York raised

In the fall of 2006, Pace University in New York raised its annual tuition from $24,751 to $29,454. Freshman enrollment declined from 1,469 in the fall of 2005 to 1,131 in the fall of 2006. Assuming t...

Q: State whether each of the following events will result in a movement

State whether each of the following events will result in a movement along the demand curve for McDonald’s Big Mac hamburgers or whether it will cause the curve to shift. If the demand curve shifts, i...

Q: What is marginal benefit? Why is the demand curve referred to

What is marginal benefit? Why is the demand curve referred to as a marginal benefit curve?

Q: In the following graph, is the consumer surplus larger with demand

In the following graph, is the consumer surplus larger with demand curve D1 or demand curve D2? Briefly explain. Compare the producer surplus with demand curve D1 and with demand curve D2.

Q: Suppose the following table shows the price of a base model Toyota

Suppose the following table shows the price of a base model Toyota Prius hybrid and the quantity of Priuses sold for three years. Do these data indicate that the demand curve for Priuses is upward slo...

Q: Many people have predicted, using a model like the one in

Many people have predicted, using a model like the one in panel (b) of Figure 17.12 on page 583, that the price of natural resources should rise consistently over time in comparison with the prices of...

Q: Explain how a downward-sloping demand curve results from consumers adjusting

Explain how a downward-sloping demand curve results from consumers adjusting their consumption choices to changes in price.

Q: How the market demand curve is derived from consumers’ individual demand curves

How the market demand curve is derived from consumers’ individual demand curves?

Q: What would need to be true for a demand curve to be

What would need to be true for a demand curve to be upward sloping?

Q: Suppose the market for ice cream cones is made up of three

Suppose the market for ice cream cones is made up of three consumers: Tiago, Terrell, and Tim. Use the information in the following table to construct the market demand curve for ice cream cones. Show...

Q: Draw a graph showing the market demand and supply curves for corn

Draw a graph showing the market demand and supply curves for corn and the demand curve for the corn produced by one corn farmer. Be sure to indicate the market price and the price the corn farmer rece...

Q: Explain whether you agree with the following remark: According to

Explain whether you agree with the following remark: According to the model of perfectly competitive markets, the demand curve for wheat should be a horizontal line. But this can’t be true: When the p...

Q: Use the following graph of the market for cigarettes to answer the

Use the following graph of the market for cigarettes to answer the questions. a. If the government imposes a 10-cent-per-pack tax on cigarettes, will the price consumers pay rise more if the demand...

Q: If the labor demand curve shifts to the left and the labor

If the labor demand curve shifts to the left and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with...

Q: What are the main variables that will cause the demand curve to

What are the main variables that will cause the demand curve to shift? Give an example of each.

Q: If the labor supply curve shifts to the left and the labor

If the labor supply curve shifts to the left and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with...

Q: Consider the natural monopoly shown in Figure 15.7 on page

Consider the natural monopoly shown in Figure 15.7 on page 520. Assume that the government regulatory agency sets the regulated price, PR, at the level of average total cost at which the demand curve...

Q: If the equilibrium price and quantity of a product were $100

If the equilibrium price and quantity of a product were $100 and 1,000 units per month in 2015 and $150 and 800 units per month in 2016, did this product experience a larger shift in its demand curve...

Q: A student was asked to draw a demand and supply graph to

A student was asked to draw a demand and supply graph to illustrate the effect on the market for smart watches of a fall in the price of displays used in smart watches, holding everything else constan...

Q: Suppose that the following table gives data on the price of rye

Suppose that the following table gives data on the price of rye and the number of bushels of rye sold in 2015 and 2016: a. Calculate the change in the quantity of rye demanded divided by the change...

Q: Why does a local McDonald’s face a downward-sloping demand curve

Why does a local McDonald’s face a downward-sloping demand curve for its Quarter Pounders? If McDonald’s raises the price of Quarter Pounders above the prices other fast-food restaurants charge for ha...

Q: Purell announced that the new chemical formula for its hand sanitizer was

Purell announced that the new chemical formula for its hand sanitizer was so effective that “just 1 squirt of Purell Advanced Hand Sanitizer kills as many germs as two squirts of any other national br...

Q: Sally runs a vegetable stand. The following table shows two points

Sally runs a vegetable stand. The following table shows two points on the demand curve for the heirloom tomatoes she sells: a. What would Sally’s marginal revenue be from lowering...

Q: Why does the entry of new firms cause the demand curve of

Why does the entry of new firms cause the demand curve of an existing firm in a monopolistically competitive market to shift to the left and to become more elastic?

Q: A student remarks: If firms in a monopolistically competitive industry

A student remarks: If firms in a monopolistically competitive industry are earning an economic profit, new firms will enter the industry. Eventually, a representative firm will find that its demand cu...

Q: The graph on the next page illustrates the average total cost curves

The graph on the next page illustrates the average total cost curves for two automobile manufacturing firms: Little Auto and Big Auto. Under which of the following conditions would you expect to see t...

Q: Adam operates a pin factory. Suppose Adam faces the situation shown

Adam operates a pin factory. Suppose Adam faces the situation shown in the following table and the cost of renting a machine is $550 per week. a. Fill in the blank cells in the table and determine the...

Q: State whether each of the following events will result in a movement

State whether each of the following events will result in a movement along the market demand curve for labor in electronics factories in China or whether it will cause the market demand curve for labo...

Q: Consider two goods: pizza and Coke. Along an individual’s demand

Consider two goods: pizza and Coke. Along an individual’s demand curve for pizza, as the price of pizza falls, does the marginal utility per dollar spent on pizza always equal the marginal utility per...

Q: Use the following graph for Yolanda’s Frozen Yogurt Stand to answer the

Use the following graph for Yolanda’s Frozen Yogurt Stand to answer the questions on the next page. a. Use the midpoint formula to calculate the price elasticity of demand for D1 b...

Q: Why was De Beers worried that people might resell their old diamonds

Why was De Beers worried that people might resell their old diamonds? How did De Beers attempt to convince consumers that previously owned diamonds were not good substitutes for new diamonds? How did...

Q: What is the relationship between a monopolist’s demand curve and the market

What is the relationship between a monopolist’s demand curve and the market demand curve? What is the relationship between a monopolist’s demand curve and its marginal revenue curve?

Q: Why is the demand curve for labor downward sloping?

Why is the demand curve for labor downward sloping?

Q: What are the five most important variables that cause the market demand

What are the five most important variables that cause the market demand curve for labor to shift?

Q: Draw the supply curve and the demand curve for a labor market

Draw the supply curve and the demand curve for a labor market in which the wage is fixed above the equilibrium level. Show the quantity of labor supplied, the quantity demanded, and the amount of unem...

Q: The price of peanuts increases. At the same time, we

The price of peanuts increases. At the same time, we see the price of jelly (which is often consumed with peanut butter) rise. How does this affect the market for peanut butter? a. The demand curve wi...

Q: Indicate whether the following changes would cause a shift in the demand

Indicate whether the following changes would cause a shift in the demand curve for Product A and, if so, the direction of the shift. Change Demand Curve Shift? Direction of Shift?  Increase in pr...

Q: Perfect price discrimination is when a firm can charge each customer exactly

Perfect price discrimination is when a firm can charge each customer exactly what they are willing to pay. In this case, a. the demand curve is very inelastic. b. the marginal revenue is the demand...

Q: Taylor Pennington produces and sells hammocks. One day during lunch he

Taylor Pennington produces and sells hammocks. One day during lunch he complained to his friend Steven Green, an economist, that he was having trouble setting prices. When he raised his prices, demand...

Q: Is it true that the “flatter” (more nearly horizontal

Is it true that the “flatter” (more nearly horizontal) the demand curve for a particular firm’s stock and the less important investors regard the signaling effect of the offering, the more important t...

Q: Characterize each of the following statements as true or false and explain

Characterize each of the following statements as true or false and explain your answer. A. If marginal revenue is less than average revenue, the demand curve will be downward sloping. B. Profits will...

Q: Indicate whether each of the following statements is true or false.

Indicate whether each of the following statements is true or false. Explain why. a. The law of diminishing marginal utility states that as an individual increases consumption of a given product within...

Q: During the past 40 years the average price of a new single

During the past 40 years the average price of a new single-family home has risen by a factor of ten, making the cost of housing prohibitive for many Americans. Over the same time frame, however, the n...

Q: What would an upward-sloping demand curve imply about the marginal

What would an upward-sloping demand curve imply about the marginal utility derived from consumption? Why aren't upward sloping demand curves observed in the real world?

Q: Kenny McCormick manages a 100-unit apartment building and knows from

Kenny McCormick manages a 100-unit apartment building and knows from experience that all units will be occupied if rent is $900 per month. McCormick also knows that, on average, one additional unit wi...

Q: Identify each of the following statements as true or false and explain

Identify each of the following statements as true or false and explain why. a. The effect of a $1 change in price is constant, but the elasticity of demand will vary along a linear demand curve b. In...

Q: Xerox Corporation develops, manufactures, and services document equipment and software

Xerox Corporation develops, manufactures, and services document equipment and software solutions worldwide. Assume the company offered $75 off the $1,475 regular price on the Phaser 6360, a durable hi...

Q: “Rapid innovation in the development, assembly, and delivery of

“Rapid innovation in the development, assembly, and delivery of personal computers has led to a sharply downward sloping market demand curve for Dell, Inc.” Discuss this statement.

Q: “Demand for higher education is highest among the wealthy. This

“Demand for higher education is highest among the wealthy. This has led to an upward sloping demand curve for college education. The higher the tuition charged, the greater is demand.” Discuss this st...

Q: The demand for housing is often described as being highly cyclical and

The demand for housing is often described as being highly cyclical and very sensitive to housing prices and interest rates. Given these characteristics, describe the effect of each of the following in...

Q: The Eastern Shuttle, Inc., is a regional airline providing shuttle

The Eastern Shuttle, Inc., is a regional airline providing shuttle service between New York and Washington, D.C. An analysis of the monthly demand for service has revealed the following demand relatio...

Q: What does the aggregate demand curve show? What factors change and

What does the aggregate demand curve show? What factors change and what factors remain the same when there is a movement along the aggregate demand curve?

Q: Why does the aggregate demand curve slope downward?

Why does the aggregate demand curve slope downward?

Q: Initially, the short-run aggregate supply curve is SAS0 and

Initially, the short-run aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate demand from AD0 to AD1. Describe two events that could have created this ch...

Q: Initially, the short-run aggregate supply curve is SAS0 and

Initially, the short-run aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate supply from SAS0 to SAS1 . Describe two events that could have created this...

Q: In an economy with a fixed price level, autonomous spending is

In an economy with a fixed price level, autonomous spending is $20 billion and the slope of the AE curve is 0.6. a. What is the equation of the AE curve? b. Calculate equilibrium expenditure. c. Calcu...

Q: In Japan, potential GDP is 600 trillion yen. The table

In Japan, potential GDP is 600 trillion yen. The table shows Japan’s aggregate demand and short-run aggregate supply schedules. a. Draw a graph of the aggregate demand curve and the...

Q: Initially, the short-run aggregate supply curve is SAS0 and

Initially, the short-run aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate demand from AD0 to AD1 and aggregate supply from SAS0 to SAS1. What is the...

Q: An economist has estimated that, near the point of equilibrium,

An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for bonds can be estimated using the following equations:
a. What is the expected equilibrium pric...

Q: As in Question 6, the demand curve and supply curve for

As in Question 6, the demand curve and supply curve for bonds are estimated using the following equations:
Following a dramatic increase in the value of the stock market, many retirees started mov...

Q: The demand curve and supply curve for bonds are estimated using the

The demand curve and supply curve for bonds are estimated using the following equations: As the stock market continued to rise, the Federal Reserve felt the need to increase the interest rates. As a r...

Q: Last month, corporations supplied $250 billion in bonds to investors

Last month, corporations supplied $250 billion in bonds to investors at an average market rate of 11.8%. This month, an additional $25 billion in bonds became available, and market rates increased to...

Q: What does the demand curve tell us about the price that consumers

What does the demand curve tell us about the price that consumers are willing to pay?

Q: Over the last century, The Boeing Co. has

Over the last century, The Boeing Co. has become the largest aerospace company in the world. Boeing’s principal global competitor is Airbus, a company that has its roots in a European consortium of F...

Q: Monopolistic Competition. Gray Computer, Inc., located in Colorado Springs

Monopolistic Competition. Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-speed electronic computers with immense storage capacity and computing capabi...

Q: Kinked Demand Curves. Assume Safety Service Products (SSP) faces

Kinked Demand Curves. Assume Safety Service Products (SSP) faces the following segmented demand and marginal revenue curves for its new infant safety seat: 1. Over the range from 0 to 10,000 units of...

Q: Indicate whether each of the following statements is true or false

Indicate whether each of the following statements is true or false and explain why. a. In competitive market equilibrium, social welfare is measured by the net benefits derived from consumption and p...

Q: “Oregon’s minimum wage increased from $4.75 in 1996

“Oregon’s minimum wage increased from $4.75 in 1996 to $5.50 in 1997, to $6 in 1998, and to $6.50 in 1999. According to a study by the Oregon Center for Public Policy, the minimum wage increases in Or...

Q: : “A higher minimum wage means some low wage workers will

“A higher minimum wage means some low wage workers will get fired because there will be less money available for labor costs. An international minimum wage, scaled according to the working conditions...

Q: Would you expect the demand curve for a firm in a monopolistically

Would you expect the demand curve for a firm in a monopolistically competitive industry to be more or less elastic in the long run after competitor entry has eliminated economic profits?

Q: Suppose the firm’s labor demand curve is given by w =

Suppose the firm’s labor demand curve is given by w = 20 - 0.01E where w is the hourly wage and E is the level of employment. Suppose also that the union’s utility function is given by U = w × E It is...

Q: Suppose the economy consists of a union and a nonunion sector.

Suppose the economy consists of a union and a nonunion sector. The labor demand curve in each sector is given by L = 1,000,000 - 20 w. The total (economy wide) supply of labor is 1,000,000, and it doe...

Q: Several states recently passed laws restricting bargaining rights for public employees.

Several states recently passed laws restricting bargaining rights for public employees. Most notably the changes tended to restrict the union’s right to negotiate over fringe benefits such as health c...

Q: Figure 4-6 shows that a payroll tax will be completely

Figure 4-6 shows that a payroll tax will be completely shifted to workers when the labor supply curve is perfectly inelastic. In this case, for example, a new $2 payroll tax will lower the wage by $2,...

Q: Suppose the supply curve of physicists is given by w = 10

Suppose the supply curve of physicists is given by w = 10 + 5 E, while the demand curve is given by w = 50 - 3 E. Calculate the equilibrium wage and employment level. Suppose now that the demand for p...

Q: Ms. Aura is a psychic. The demand for her services

Ms. Aura is a psychic. The demand for her services is given by Q = 2,000 - 10 P, where Q is the number of one-hour sessions per year and P is the price of each session. Her marginal revenue is MR = 20...

Q: In our story of Tom, the student confronted with a web

In our story of Tom, the student confronted with a web design assignment, we emphasized the great urgency of his desire for web tutoring. Many people would say that Tom had an "absolute need" for web...

Q: With respect to the demand for college enrollment, which of the

With respect to the demand for college enrollment, which of the following would cause (1) a movement along the demand curve or (2) a shift of the demand curve? a. An increase in incomes. b. Lower...

Q: In Figure 3.8, why is the organ demand curve

In Figure 3.8, why is the organ demand curve downward-sloping rather than vertical? Figure 3.8:

Q: Illustrate what’s happening to oil prices in the World View on page

Illustrate what’s happening to oil prices in the World View on page 63. (a) Which direction did the demand curve shift (left or right)? (b) Which direction did the supply curve shift (left or right)?...

Q: Economists call the increase in insurance costs that resulted from the September

Economists call the increase in insurance costs that resulted from the September 11th attacks an _____ shock which leads to the ________. a) aggregate demand; aggregate demand curve shifting left b)...

Q: When a program like Medicaid is introduced, the market demand curve

When a program like Medicaid is introduced, the market demand curve for health care will a) increase and flatten. b) increase and become more steep. c) decrease and flatten. d) decrease and become...

Q: Economists call the reduction in consumer confidence that resulted from the September

Economists call the reduction in consumer confidence that resulted from the September 11th attacks an _____ shock which leads to the ________. a) aggregate demand, aggregate demand curve shifting lef...

Q: Imagine that ‘Sunshine’ sunflower margarine, a well-known brand

Imagine that ‘Sunshine’ sunflower margarine, a well-known brand, is advertised with the slogan, ‘It helps you live longer’ (the implication being that butter and margarines high in saturates shorten y...

Q: 1. A change in demand causes a (movement along/

1. A change in demand causes a (movement along/ shift of) the demand curve. A change in quantity demanded causes a (movement along/shift of) the demand curve. 2. Circle the variables that change as we...

Q: 1. Fill in the blanks in the following table. Note

1. Fill in the blanks in the following table. Note that the ordering of the first column has been scrambled. 2. When (supply/demand) changes, the equilibrium price and the equilibrium quantity chang...

Q: 1. Arrow up or down: According to the law of

1. Arrow up or down: According to the law of demand, an increase in price __________ the quantity demanded. 2. From the following list, choose the variables that are held fixed in drawing a market de...

Q: 3.1. Arrows up or down: A decrease in

3.1. Arrows up or down: A decrease in the supply of nurses will the equilibrium wage and the equilibrium quantity of nursing services. 3.2. Arrows up or down: An increase in the demand for nu...

Q: 1.1. The marginal revenue product of labor equals times

1.1. The marginal revenue product of labor equals times . 1.2. A profit-maximizing firm will hire the number of workers where equals . 1.3. Your favorite professio...

Q: 1.1. The firm-specific demand curve shows the

1.1. The firm-specific demand curve shows the relationship between the charged by the firm and the by the firm. 1.2. Consumers do not have a strong preference for the output of one seller over that o...

Q: 4.1. Suppose the supply of money increases, causing

4.1. Suppose the supply of money increases, causing output to exceed full employment. Prices will __________ and real GDP will __________ in the short run, and prices will __________ and real GDP will...

Q: 2.1. Which of the following is not a component

2.1. Which of the following is not a component of aggregate demand? a. Consumption b. Investment c. Government expenditures d. The supply of money e. Net exports 2.2. When we draw the aggregate...

Q: 1.1. To decrease aggregate demand, a government can

1.1. To decrease aggregate demand, a government can either decrease spending or _________ taxes. 1.2. Fiscal policy refers to the _________ and _________ policies used by the government to influence...

Q: 6.1. An increase in the price level will _________

6.1. An increase in the price level will _________ GDP and thereby move the economy _________ the aggregate demand curve. 6.2. At any price level, the income-expenditure model determines the level of...

Q: 3.1. Labor market equilibrium occurs at a real wage

3.1. Labor market equilibrium occurs at a real wage at which the quantity demanded for labor equals the quantity __________ of labor. 3.2. The labor __________ (demand/supply) curve is based on the d...

Q: 3.1. Demand is _________ on the upper portion of

3.1. Demand is _________ on the upper portion of a linear demand curve and _________ on the lower portion of a linear demand curve. 3.2. If Maria spends a fixed dollar amount per week on movie rental...

Q: 1.1. Consumer surplus equals minus . 1.

1.1. Consumer surplus equals minus . 1.2. Producer surplus equals minus . 1.3. In Figure 21.1, Tupak’s consumer surplus is , co...

Q: 3.1. Arrow up or down: In Figure 21

3.1. Arrow up or down: In Figure 21.5, rent control the quantity of apartments , producer surplus, consumer surplus , and the total market surplus...

Q: 4.1. In Figure 21.6, the taxi

4.1. In Figure 21.6, the taxi medallion policy prevents mutually beneficial transactions for consumers on the demand curve between points and and producers on the supply curve between...

Q: 2.1. You are willing to pay $3,

2.1. You are willing to pay $3,000 to have your windows covered, and Tom’s marginal cost of covering windows is $2,500. If you agree to split the difference, the price is ,...

Q: 4.1. A price-discriminating firm will charge a

4.1. A price-discriminating firm will charge a higher price to consumers with a relatively (elastic/ inelastic) demand and a lower price to consumers with a relatively (elastic/inelastic) demand. 4.2....

Q: 1.1. For a monopolist, marginal revenue is (

1.1. For a monopolist, marginal revenue is (greater/less) than price. 1.2. A monopoly that cuts its price gains revenue from its customers but loses revenue from its customers. 1.3. At a price of $1...

Q: 2.1. A monopoly is inefficient solely because the monopolist

2.1. A monopoly is inefficient solely because the monopolist gets a profit at the expense of consumers. (True/False) 2.2. To show the deadweight loss from monopoly, we compare the monop...

Q: 4.1. Otto has a monopoly on limousine service,

4.1. Otto has a monopoly on limousine service, and Carla is thinking about entering the market. The outcome of the entry-deterrence game represented by the game tree on the following page is that Otto...

Q: 1.1. Arrows up or down: At a natural

1.1. Arrows up or down: At a natural monopolist’s current level of output, marginal cost exceeds marginal revenue. The firm should its output and its price. 1.2....

Q: 4.1. In the market for insurance, the moral

4.1. In the market for insurance, the moral-hazard problem is that encourages . 4.2. While shopping for office equipment, an office manager sees a display of fire extinguishers. After maki...

Q: Assume that the marginal product of capital is given by the following

Assume that the marginal product of capital is given by the following expression: MPK =60 K0.7 (K is measured in trillions). a) Graph the demand curve for capital and find the equilibriu...

Q: Suppose the monetary policy curve is given by r = 1.

Suppose the monetary policy curve is given by r = 1.5 + 0.75 π, and the IS curve is given by Y = 13 - r. a) Find the expression for the aggregate demand curve. b) Calculate aggregate output when the i...

Q: What would be the effect on the aggregate demand curve of an

What would be the effect on the aggregate demand curve of an increase in U.S. net exports? Would an increase in net exports affect the monetary policy curve? Explain why or why not.

Q: Suppose the economy experiences a contraction in aggregate output. How would

Suppose the economy experiences a contraction in aggregate output. How would this event affect the demand curve for real money balances? On the graph from part (b) of Problem 6, draw the original and...

Q: Explain why the aggregate demand curve slopes downward and the short-

Explain why the aggregate demand curve slopes downward and the short-run aggregate supply curve slopes upward.

Q: Identify changes in three factors that will shift the aggregate demand curve

Identify changes in three factors that will shift the aggregate demand curve to the right and changes in three different factors that will shift the aggregate demand curve to the left.

Q: Suppose the monetary policy curve is given by r = 1.

Suppose the monetary policy curve is given by r = 1.5 + 0.75 π, and the IS curve is given by Y = 13 - r. a) Find the expression for the aggregate demand curve. b) Calculate aggregate output when the i...

Q: What would be the effect on the aggregate demand curve of an

What would be the effect on the aggregate demand curve of an increase in U.S. net exports? Would an increase in net exports affect the monetary policy curve? Explain why or why not.

Q: Suppose the economy experiences a contraction in aggregate output. How would

Suppose the economy experiences a contraction in aggregate output. How would this event affect the demand curve for real money balances? On the graph from part (b) of Problem 6, draw the original and...

Q: Explain why the aggregate demand curve slopes downward and the short-

Explain why the aggregate demand curve slopes downward and the short-run aggregate supply curve slopes upward.

Q: Identify changes in three factors that will shift the aggregate demand curve

Identify changes in three factors that will shift the aggregate demand curve to the right and changes in three different factors that will shift the aggregate demand curve to the left.

Q: A company faced by an elastic demand curve will always benefit by

A company faced by an elastic demand curve will always benefit by decreasing price. True or false? Explain.

Q: Background Information: Restaurants have traditionally used bottom-end wines to

Background Information: Restaurants have traditionally used bottom-end wines to sell by the glass (BTG) at reasonably low prices per glass. In recent years, there has been a growing trend within the r...

Q: The demand curve for product a is given as Q = 2000

The demand curve for product a is given as Q = 2000 - 20P. a. How many units will be sold at $10? b. At what price would 2,000 units be sold? 0 units? 1,500? c. Write equations for total revenue and m...

Q: The demand function for a cola-type soft drink in general

The demand function for a cola-type soft drink in general is Q = 20 - 2P, where Q stands for quantity and P stands for price. a. Calculate point elastic cities at prices of 5 and 9. Is the demand curv...

Q: ABC Sports, a store that sells various types of sports clothing

ABC Sports, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of Arizona Diamondbacks’ baseball caps. A consultant has estimated the dem...

Q: The equation for a demand curve has been estimated to be Q

The equation for a demand curve has been estimated to be Q = 100 - 10P + 0.5Y, where Q is quantity, P is price, and Y is income. Assume P = 7 and Y = 50. a. Interpret the equation. b. At a price of 7,...

Q: The ABC marketing consulting firm found that a particular brand of tablet

The ABC marketing consulting firm found that a particular brand of tablet PCs has the following demand curve for a certain region: Q = 10,000 - 200P + 0.03Pop + 0.6I + 0.2A where Q is the quantity per...

Q: Joy’s Frozen Yogurt shops have enjoyed rapid growth in northeastern states in

Joy’s Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of Joy’s various outlets, it was found that the demand curve follows this pattern: Q = 200...

Q: Why is it unlikely that a firm would sell at a price

Why is it unlikely that a firm would sell at a price and quantity where its demand curve is price inelastic?

Q: Could a straight-line demand curve ever have the same elasticity

Could a straight-line demand curve ever have the same elasticity on all its points?

Q: If a demand curve facing a firm is horizontal or nearly so

If a demand curve facing a firm is horizontal or nearly so, what does it say about this firm’s competition?

Q: Consider the following model. The dynamics of inflation are given by

Consider the following model. The dynamics of inflation are given by the continuous-time version of (6.23) (6.24): π(t) = λ[y(t)− y(t)], λ>0. The IS curve takes the traditional form, y(t) =− [i(t) − π...

Q: (Instructor-provided spreadsheet recommended.) Happy Valley is the only

(Instructor-provided spreadsheet recommended.) Happy Valley is the only available camping area in Rural County. It is owned by the county, which allows free access to campers. Almost all visitors to H...

Q: (This question pertains to Appendix 3A; instructor-provided spreadsheet

(This question pertains to Appendix 3A; instructor-provided spreadsheet recommended). Imagine a person’s utility function over two goods, X and Y, where Y represents dollars. Specifically, assume a C...

Q: Consider the example presented in Figure 4.3. Compute the

Consider the example presented in Figure 4.3. Compute the annual loss in consumer surplus for the price increase from $1.25 to $1.75. a. Assume a linear demand curve as per equation (4.7) b. Assume a...

Q: “The price of a bushel of wheat, which was $

“The price of a bushel of wheat, which was $3.00 last month, is $3.70 today. The demand curve for wheat must have shifted rightward between last month and today.” Discuss.

Q: Using numbers, explain how a market demand curve is derived from

Using numbers, explain how a market demand curve is derived from two individual demand curves.

Q: With respect to each of the following changes, identify whether the

With respect to each of the following changes, identify whether the demand curve will shift rightward or leftward: a. An increase in income (the good under consideration is a normal good) b. A rise in...

Q: Suppose the demand curve is downward sloping, the supply curve is

Suppose the demand curve is downward sloping, the supply curve is upward sloping, and the equilibrium quantity is 50 units. Show on a graph that the difference between the maximum buying price and min...

Q: Think of two types of books, A and B. Book

Think of two types of books, A and B. Book A can be purchased new by someone and resold as a used book. Book B can only be purchased new by someone (it cannot be resold as a used book). All other thi...

Q: Explain how to derive a market demand curve and represent your explanation

Explain how to derive a market demand curve and represent your explanation diagrammatically.

Q: Suppose the demand curve for a good is downward-sloping and

Suppose the demand curve for a good is downward-sloping and the supply curve is upward-sloping. Now suppose demand rises. Will producers’ surplus rise or fall? Explain your answer.

Q: Why is the demand curve for money downward sloping?

Why is the demand curve for money downward sloping?

Q: Show graphically that the more interest rate insensitive the investment demand curve

Show graphically that the more interest rate insensitive the investment demand curve is, the less likely it is that monetary policy will be effective at changing Real GDP.

Q: (Instructor-provided spreadsheet recommended.) Happy Valley is the only

(Instructor-provided spreadsheet recommended.) Happy Valley is the only available camping area in Rural County. It is owned by the county, which allows free access to campers. Almost all visitors to H...

Q: “It would be incorrect to say that an industry’s labor

“It would be incorrect to say that an industry’s labor demand curve is simply the horizontal sum of the demand curves of the individual firms.” Do you agree? Explain.

Q: Suppose marginal productivity tripled while product price fell by half in Table

Suppose marginal productivity tripled while product price fell by half in Table 5.2. What would be the net impact on the location of the short-run labor demand curve in Figure 5.2? Figure 5.2

Q: “Only that portion of the MP curve that lies below AP

“Only that portion of the MP curve that lies below AP constitutes the basis for the firm’s short-run demand curve for labor.” Explain.

Q: A demand curve is given by p = 450/(x +

A demand curve is given by p = 450/(x + 8). Find the consumer surplus when the selling price is $10.

Q: In a purely competitive market, the price of a good is

In a purely competitive market, the price of a good is naturally driven to the value where the quantity demanded by consumers matches the quantity made by producers, and the market is said to be in eq...

Q: A company modeled the demand curve for its product (in dollars

A company modeled the demand curve for its product (in dollars) by the equation Use a graph to estimate the sales level when the selling price is $16. Then find (approximately) the consumer surplus fo...

Q: Now suppose world relative demand takes the following form: Demand for

Now suppose world relative demand takes the following form: Demand for apples>demand for bananas = price of bananas>price of apples. a. Graph the relative demand curve along with the relative supply c...

Q: Home’s demand curve for wheat is D = 100 - 20P

Home’s demand curve for wheat is D = 100 - 20P. Its supply curve is S = 20 + 20P. Derive and graph Home’s import demand schedule. What would the price of wheat be in the absence of trade?

Q: The nation of Acirema is “small” and unable to affect

The nation of Acirema is “small” and unable to affect world prices. It imports peanuts at the price of $10 per bag. The demand curve is D = 400 - 10P. The supply curve is S = 50 + 5P. Determine the...

Q: A small country can import a good at a world price of

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is S = 20 + 10P. The demand curve is D = 400 - 5P. In addition, each unit of production yiel...

Q: For each of the following situations, indicate the direction of the

For each of the following situations, indicate the direction of the shift in the supply curve or the demand curve for dollars, the factor causing the change, and the resulting movement of the equilibr...

Q: “The schools are not in the business of pleasing parents and

“The schools are not in the business of pleasing parents and students, and they cannot be allowed to set their own agendas. Their agendas are set by politicians, administrators, and...

Q: Why is the demand curve facing a monopolist downward sloping while the

Why is the demand curve facing a monopolist downward sloping while the demand curve facing a perfectly competitive firm is horizontal?

Q: In The General Theory of E mployment, Interest, and Money

In The General Theory of E mployment, Interest, and Money, Keynes wrote: The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than i...

Q: Draw a graph that shows a monopolistically competitive firm with a short

Draw a graph that shows a monopolistically competitive firm with a short-run profit. Explain what will happen to its demand curve as additional firms enter the industry.

Q: What is the relationship between the marginal revenue product (MRP)

What is the relationship between the marginal revenue product (MRP) and the demand curve for labor?

Q: Explain the statement “People respond to incentives and disincentives” in

Explain the statement “People respond to incentives and disincentives” in relation to the demand curve and supply curve for good X.

Q: Suppose a perfectly competitive firm’s demand curve is below its average total

Suppose a perfectly competitive firm’s demand curve is below its average total cost curve. Explain the conditions under which a firm continues to produce in the short run.

Q: Consider Exhibit 12, which shows the graph of a perfectly competitive

Consider Exhibit 12, which shows the graph of a perfectly competitive firm in the short run. a. If the firm’s demand curve is MR3, does the firm earn an economic profit or loss? b. Which demand curve(...

Q: Identify the three ranges of the aggregate supply curve. Explain the

Identify the three ranges of the aggregate supply curve. Explain the impact of an increase in the aggregate demand curve in each segment.

Q: Suppose that a monopolistically competitive restaurant is currently serving 230 meals per

Suppose that a monopolistically competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, ATC per meal is $10 and consumers are willing to pay $12...

Q: Assume that a hypothetical economy with an MPC of .8 is

Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion?...

Q: Suppose that the investment demand curve in a certain economy is such

Suppose that the investment demand curve in a certain economy is such that investment declines by $100 billion for every 1 percentage point increase in the real interest rate. Also, suppose that the i...

Q: How does monopolistic competition differ from pure competition in its basic characteristics

How does monopolistic competition differ from pure competition in its basic characteristics? From pure monopoly? Explain fully what product differentiation may involve. Explain how the entry of firms...

Q: Which of the following help to explain why the aggregate demand curve

Which of the following help to explain why the aggregate demand curve slopes downward? a. When the domestic price level rises, our goods and services become more expensive to foreigners. b. When gove...

Q: Which of the following will shift the aggregate demand curve to the

Which of the following will shift the aggregate demand curve to the left? a. The government reduces personal income taxes. b. Interest rates rise. c. The government raises corporate profit taxes. d....

Q: Suppose that consumer spending initially rises by $5 billion for every

Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall...

Q: Suppose that the aggregate demand and aggregate supply schedules for a hypothetical

Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below: a. Use these sets of data to graph the aggregate demand and aggregate supply curves. W...

Q: Why is the aggregate demand curve downsloping? Specify how your explanation

Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in sh...

Q: Which of the following scenarios will shift the investment demand curve right

Which of the following scenarios will shift the investment demand curve right? a. Business taxes increase. b. The expected return on capital increases. c. Firms have a lot of unused production capaci...

Q: Refer to Figure 2 in the Appendix and assume that Q1 is

Refer to Figure 2 in the Appendix and assume that Q1 is $400 and Q2 is $500, the price level is stuck at P1, and the slopes of the AE lines in Figure 2a are .75 and equal to the MPC. In what direction...

Q: How does the demand curve faced by a purely monopolistic seller differ

How does the demand curve faced by a purely monopolistic seller differ from that confronting a purely competitive firm? Why does it differ? Of what significance is the difference? Why is the pure mono...

Q: Suppose that over a 30-year period Buskerville’s price level increased

Suppose that over a 30-year period Buskerville’s price level increased from 72 to 138 while its real GDP rose from $1.2 trillion to $2.1 trillion. Did economic growth occur in Buskerville? If so, by w...

Q: Suppose that the paper clip industry is perfectly competitive. Also assume

Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: a...

Q: Bill spends his money on flowers and cookies so as to maximize

Bill spends his money on flowers and cookies so as to maximize his total utility. Both flowers and cookies start off costing $2 each. At that price, Bill buys three flowers and two cookies. When the p...

Q: Look at the demand curve in Figure 6.2a. Use

Look at the demand curve in Figure 6.2a. Use the midpoint formula and points a and b to calculate the elasticity of demand for that range of the demand curve. Do the same for the demand curves in Fig...

Q: To estimate the equilibrium rate of interest, the economics division of

To estimate the equilibrium rate of interest, the economics division of Mountain Banks—a major bank holding company—has gathered the data summarized in the followin...

Q: The supply and demand curves for a new widget are shown in

The supply and demand curves for a new widget are shown in the lower graph on the right. Notice there are two demand curves. The original demand curve is d1. Months after the product was i...

Q: A fast-food restaurant chain whose menu features hamburgers and chicken

A fast-food restaurant chain whose menu features hamburgers and chicken sandwiches is about to add a fish sandwich to its menu. There was considerable debate among the executives about the likely dema...

Q: Explain why the demand curve in the foreign exchange market slopes downward

Explain why the demand curve in the foreign exchange market slopes downward.

Q: Explain the difference between movement down, or along, the aggregate

Explain the difference between movement down, or along, the aggregate demand curve and a shifting out of the aggregate demand curve.

Q: Consider the local telephone company, a natural monopoly. The following

Consider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services, the company's marginal revenue (MR), marginal cost (MC), and average to...

Q: The demand function for a certain commodity is p = 20 –

The demand function for a certain commodity is p = 20 – 0.05x. Find the consumer surplus when the sales level is 300. Illustrate by drawing the demand curve and identifying the consumer surplus as an...

Q: A company modeled the demand curve for its product (in dollars

A company modeled the demand curve for its product (in dollars) by the equation Use a graph to estimate the sales level when the selling price is $16. Then find (approximately) the consumer surplus...

Q: A demand curve is given by p = 450/ (x

A demand curve is given by p = 450/ (x + 8). Find the consumer surplus when the selling price is $10.

Q: For a given commodity and pure competition, the number of units

For a given commodity and pure competition, the number of units produced and the price per unit are determined as the coordinates of the point of intersection of the supply and demand curves. Given th...

Q: Consider a rectangle in the xy-plane, with corners at

Consider a rectangle in the xy-plane, with corners at (0, 0), (a, 0), (0, b), and (a, b). If (a, b) lies on the graph of the equation y = 30 - x, find a and b such that the area of the rectangle is ma...

Q: Find the consumers’ surplus for the demand curve p = √(25

Find the consumers’ surplus for the demand curve p = √(25 - .04x) at the sales level x = 400.

Q: As a profit-maximizing monopolist, you face the demand curve

As a profit-maximizing monopolist, you face the demand curve Q =  + P + . In the past, you have set the following prices and sold the accompanying...

Q: In the appendix to Chapter 7, we learned how the wage

In the appendix to Chapter 7, we learned how the wage-setting and price-setting equations could be expressed in terms of labor demand and labor supply. In this problem, we extend the analysis to accou...

Q: Suppose that each firm in a competitive industry has the following costs

Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 1/2q2 Marginal cost: MC = q where q is an individual firm’s quantity produced. The market demand curve f...

Q: Your company just became international, by offering its products in both

Your company just became international, by offering its products in both the United States and Canada. Experts in your analytics department believe that tastes for your product differ in those two cou...

Q: As an online video commentator, you are committed to offering your

As an online video commentator, you are committed to offering your videos without ads. Until now, you’ve experimented with different per-video prices for your content and collected user level data on...

Q: The demand curve for product X is given by Qx d =

The demand curve for product X is given by Qx d = 500 − 4Px. (LO2) a. Find the inverse demand curve. b. How much consumer surplus do consumers receive when Px = $50? c. How much consumer surplus do co...

Q: The demand for good X is given by, /

The demand for good X is given by, Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $70,00...

Q: Using regression analysis on data from a field experiment, the demand

Using regression analysis on data from a field experiment, the demand curve for a product is estimated to be Qx d = 1,200 − 3 Px − 0.1 Pz, where Pz = $300. a. What is the own price elasticity of deman...

Q: When trying to assess differences in her customers, Claire—the

When trying to assess differences in her customers, Claire—the owner of Claire’s Rose Boutique—noticed a difference between the typical demand of her female versus her male customers. In particular, s...

Q: As a manager in a monopolistically competitive industry, you are trying

As a manager in a monopolistically competitive industry, you are trying to determine the optimal price for your product. You’ve asked the analysts in your firm to determine as closel...

Q: A potential entrant can produce at the same cost as the monopolist

A potential entrant can produce at the same cost as the monopolist illustrated in the accompanying figure. The monopolist’s demand curve is given by DM, and its average cost curve is...

Q: You are the manager of Taurus Technologies, and your sole competitor

You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C (Qi) =...

Q: PC Connection and CDW are two online retailers that compete in an

PC Connection and CDW are two online retailers that compete in an Internet market for digital cameras. While the products they sell are similar, the firms attempt to differentiate themselves through t...

Q: You are a new entrant in a market with just one incumbent

You are a new entrant in a market with just one incumbent, who sells a roughly equivalent product. You initially take on the follower role when it comes to choosing the amount of your product to manuf...

Q: The graph that accompanies this question illustrates two demand curves for a

The graph that accompanies this question illustrates two demand curves for a firm operating in a differentiated-product oligopoly. Initially, the firm charges a price of $60 and produces 10 units of o...

Q: How often do you rent videos? Would you do so more

How often do you rent videos? Would you do so more often if a rental cost half as much? Distinguish between your demand curve for home videos and your “quantity demanded” at the current price.

Q: The same rightward shift of the demand curve may produce a very

The same rightward shift of the demand curve may produce a very small or a very large increase in quantity, depending on the slope of the supply curve. Explain this conclusion with diagrams.

Q: How are the following demand curves likely to shift in response to

How are the following demand curves likely to shift in response to the indicated changes? a. The effect of a drought on the demand curve for umbrellas b. The effect of higher popcorn prices on the dem...

Q: Use an aggregate supply-and-demand diagram to study what

Use an aggregate supply-and-demand diagram to study what would happen to an economy in which the aggregate supply curve never moved while the aggregate demand curve shifted outward year after year.

Q: If the dollar appreciates relative to the euro, will the German

If the dollar appreciates relative to the euro, will the German camera you have wanted become more or less expensive? What effect do you imagine this change will have on American demand for German cam...

Q: Two points on the demand curve were given: a.

Two points on the demand curve were given: a. Suppose three additional points are estimated by Madison: (1) demand of 460 when price is $65, (2) demand of 355 when price is $75, and (3) demand of 275...