ECON 230D1 Chapter Notes - Chapter 2: Shortage, Market Power, Perfect Competition

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1 May 2017

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Diff factors in uence d, like price, tastes, advertising, information/misinformation, prices of other goods (subs and complements), income, gov rules and regulations, etc. Substitute: a product that you view as similar/identical to a good that you consider purchasing. Complement: something that you like to consume at the same time as the good that . Quantity demanded is the amount of a good that consumers are willing to buy at a given price. Law of demand: consumers demand more the lower the price. When there is another factor that in uences a change in the demand curve, then the curve shifts. Q= d(p,po,y) where p is price of good, po is other good and y is income. P= p2-p1 when there"s a change in price. Diff factors in uence s, like price, gov rules and reg, and costs of production. Q supplied is the amount of good that rms want to sell at a given price. other factors constant.

Related Questions

a. An increase in the price of Post Frosted Mini Wheats (a substitute for Kellogg Frosted Mini Wheats) should

shift the Demand curve for Kellogg Frosted Mini Wheats to the right.
shift the Demand curve for Post Frosted Mini Wheats to the left.
cause the Demand curve for Pepsi to shift to the right.
cause no shift in the Demand curve for Kellogg Frosted Mini Wheats.
cause the Demand curve for Kellogg Frosted Mini Wheats to shift to the left.

b. Assuming Demand is downward sloping and Supply is upward sloping (as we usually do), what happens to equilibrium price and quantity of a good when Supply decreases?

P decreases; Q decreases

P increases; Q decreases

P decreases; Q increases

P and Q should not change

P increases; Q increases

c. Suppose frictional unemployment is typically UF = 3.0% and structural unemployment is typically US = 2.0%, then what is the "natural" rate of unemployment, UN?

none of the other options

1. A point on the graph of a demand curve has co-ordinates P, and Q. Which of the following three interpretations of this point on the demand curve) are correct?: 1. The maximum price that any consumer is willing to pay for this good is P, and the minimum amount this consumer is willing to purchase at that price is Q, of the good. m. At the price P, the maximum amount of the good that consumers are willing to purchase is Q. of the good. VIX. Although some consumers are willing to pay more than P, for this good, the maximum price consumers are willing to pay for the last unit of the good i.e., the Qith unit of the good) is P. (A) Only statement I is correct (B) Only statement II is correct (C) Only statement Ill is correct (D) Statements I and II are both correct (E) Statements I and III are both correct (F) Statements II and III are both correct (G) Statements I and II and Ill are all correct (H) None of the statements are correct

ts) The demand for organic carrots is given by the following

equation:QDO = 75-5PO+PC+2I

where PO is the price of organic carrots,PC is the price of conventional carrots, and I is the average consumer income. Notice how this isn't a standard demand curve that just relates the quantity of organic carrots demanded to the price of organic carrots. This demand function also describes how other factors a ect demand namely, the price of another good (conventional carrots) and income

b) Using the demand curve drawn in (a), what is the quantity demanded of organic carrots when PO= 10?

c) Using the demand curve drawn in (a), what is the quantity demanded of organic carrots when PO= 5?

d) Now, suppose PO= 10 and PC= 15 (I remains at 10). What is the quantity demanded of organic carrots? Compared with your answer in (b), has there been a change in demand or quantity demanded? Demonstrate using a graph.

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ECON 230D1 Chapter Notes - Chapter 2: Shortage, Market Power, Perfect Competition

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