Exam 5: Supply Demand and Price Applications

The demand to attend a certain college is represented by a downward-sloping demand curve. The supply of spots at the college is represented by a vertical supply curve. At the tuition that students are charged, there is a shortage of spots at the college. If the demand to attend the college rises, but the tuition stays constant, it follows that the

If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates, the result will likely be a(n) _______________ in housing prices.

The supply curve for space on a freeway is perfectly vertical at any given point in time.

Exhibit 5-1 -Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₁ creates __________ at 8 a.m. and __________ at 11 p.m.

If the supply of aisle seats equals the supply of middle seats on an airplane, and the demand for aisle seats is _____________ than the demand for middle seats, then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

Exhibit 5-3 -Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. If the college is allowed to pay this student athlete its market equilibrium wage of $10,000, what is the consumers' surplus for the college that buys this one athlete's services at this wage?

If there is typically bumper-to-bumper traffic on a freeway at 5 p.m., we can reduce (or eliminate) the traffic congestion by

The price of good B has a pattern such that P = $20 on Monday through Thursday of every week, and P = $25 on Fridays. If speculators begin participating in the market for good B, their actions will likely lead to a(n) ______________ in the price of good B on Monday through Thursday and a(n) _______________ in the price of good B on Friday.

The supply curve for seats in a traditional college classroom is horizontal.

Exhibit 5-1 -Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. Graphically, the result of the increase in freeway space would be shown by a.m. and 11 p.m. Suppose that the government decides to set the money price of driving on the freeway at zero, but builds more freeways to eliminate the shortage of freeway space at 8 a.m. Graphically, the result of the increase in freeway space would be shown by a. shifting the supply of freeway space curve rightward.

If the supply of aisle seats and middle seats on an airplane is the same, but the demand for aisle seats is greater than the demand for middle seats, then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Exhibit 5-1 -Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₂ creates __________ at 8 a.m. and __________ at 11 p.m.

High demand for a product does not necessarily mean a high quantity demanded for that product if the price is high enough.

There is no toll charge to drive on freeway A. If there is freeway congestion at 9 a.m., there will be greater freeway congestion at 11 a.m. if

If the government enacts legislation which allows lenders to lower lending standards, the government indirectly___________ the demand for which leads to _________ house prices.

The price of good XYZ has a pricing pattern such that P = $50 on Monday through Thursday of every week, and P = $65 on Fridays. If speculators begin participating in the market for good XYZ, their actions will likely lead to a(n) ______________ in the price of good XYZ on Monday through Thursday and a(n) _______________ in the price of good XYZ on Friday.