Exam 2: Demand, Supply, and Equilibrium Analysis

Unionized workers may be able to negotiate with management for higher wages during periods of economic prosperity. Suppose that workers at automobile assembly plants successfully negotiate a significant increase in their wage package. How would the new wage contract be likely to affect the market supply of new cars?

A minimum wage set below the market equilibrium wage will result in higher unemployment.

Excess supply causes the price to

What would your answer to the previous question be if the current market-clearing wage equaled $7.00?

The cost of protection of domestic jobs from foreign competition is usually paid by domestic consumers in the form of higher prices on imported goods.

If both demand and supply decrease at the same time, then

A good is normal if a rise in consumers' income causes

If there is a shortage in a rental market, what is expected?

Import tariffs on a good or a service do all of the following, except

A decline in the supply will cause a change in

If automobile manufacturers are producing cars faster than people want to buy them,

At a price of $299.99, the manufacturer of a portable air conditioner is willing to produce 19,000 units per quarter. At a price of $349.99, it is likely that the manufacturer will be willing to produce

Assume that the demand is estimated to be: $Q _ { D } = 50 + 0.1 \text { Income } - P$ (i)Is this demand equation consistent with the law of demand? (ii)Is this a demand for a normal or inferior good? (iii)Construct the demand schedule for this demand, evaluated at two different income levels (I = 100, and I = 200), using the table below: Price Quantity Demanded Income =100 Quantity Demanded Income =200 10 20 30 40 50

In which scenario will both the equilibrium price and quantity increase at the same time?

Excess demand causes the price to

Assume that the demand and the supply in a market are represented by the following equations: $Q _ { D } = 100 - 3 P$ $Q _ { s } = 2 P - 10$ (i)Compute the market equilibrium in this case. (ii)If the government were to introduce an excise tax of $1 per unit of output, what would the new equilibrium be? What would the economic incidence of this tax be?

Assume that the demand for a specific tablet computer (X) is represented by the following equation: $Q d _ { X } = 2000 - 20 P _ { X } + 10 P _ { Y } - 20 P _ { Z }$ Which of the products Y and Z is a substitute to tablet computer? Which of the products is a complement?

Which of the following is not a characteristic of a nonclearing market?

Assume that the demand is represented by the following equation: $Q _ { D } = 100 + 0.01 \text { Income- } 3 P$ Also assume that the supply is represented by the following equation: $Q _ { s } = P - I O$ (i)Assume that the consumer income is $3,000. Please compute the market equilibrium price and quantity. (ii)Now, assume that the economy goes into a recession and the consumer's income declines to $2,000. What will the new equilibrium values be now?

In a perfectly competitive market no individual producer or consumer can change the market price.