Exam 4: Supply and Demand: An Initial Look

Figure 4-8 -Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

Give an example of a price ceiling.Draw a corresponding diagram and explain why there is a continuing shortage.

A government policy that prevents the price of a good or service from falling below a specified level is called a price floor and usually results in

Technological advances shift the supply curve rightward.

The demand for home computers has increased,yet the price has fallen.Explain this apparent paradox.

What is the economic reasoning behind the proposal to legalize drugs?

Table 4-1 Use this table for the following questions. -Refer to Table 4-1.What is the equilibrium price in the example above?

All other factors held constant,if the price of game consoles rise,the demand for gaming titles will

Suppose demand can be described with the equation Q = 900 − 5P and supply with the equation Q = 100 + 5P. a.Determine the equilibrium price and quantity. b.Determine the surplus or shortage if the price were $100.

The imposition of price ceilings on a market often results in

Exhibit 4-1 The following are the equations for the supply and demand curves in the market for weezils: where Qd is the quantity demanded, Qs is the quantity supplied, and P is the price per weezil in dollars. -Refer to Exhibit 4-1.According to the data given,when the market is in Equilibrium,how many weezils are sold?

Figure 4-16 -Assume that Figure 4-16 shows the supply of new houses.An improvement in the technology for building houses will shift supply from

When price is above the equilibrium level,competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.

Why does quantity demanded decrease when price increases?

Rent controls are most often designed to protect the investment made by apartment building owners.

Table 4-1 Use this table for the following questions. -Refer to Table 4-1.At $10,what is the surplus?

Firms often seek to borrow money to expand their capital stock,and the price they pay for that money is the interest rate.What happens to the demand for money if the interest rate increases?

To be effective,a price floor must be

Demand and quantity demanded are the same thing.

At equilibrium,the market will clear,with no surpluses or shortages occurring.