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ECO100Y1 Lecture Notes - Lecture 3: List Price, Shortage, Economic Equilibrium

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School
UTSG
Department
Economics
Course
ECO100Y1
Professor
James Pesando

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Document Summary

Other things equal, the higher the price of a good, the higher the quantity demanded. Source: firms seeking to maximize profits: market supply curve: sum of firm supply (look at the case of demand market, same thing) *assume there is a lot of firms, can"t exert very much influence on price. A change in quantity supplied(when price changes) is a movement along the curve. A change in supply(for a given price) is a shift in the supply curve. Sources of shift include: weather (agricultural products, number of firms, prices of inputs (basically resources used to make product, technology (cost of production will decrease) A change in the supply of coffee (for a given price, a change in quantity supplied: weather (severe drought, technology (cost of harvesting beans is cheaper) Any other price: market forces will change: p = 4, p = 2. Qd > qs shortage price rises. *demand and supply curves are very unlikely to be linear.

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Related Questions

Question 1:-
If new manufacturers enter the computer industry, the [a] curve will [b] to the [c].
----------------------------------------
Question 2:-
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect Andy's demand for [a] to [b].
----------------------------------------

Question 3:-

Various factors cause the demand curve to shift. These can include:

A.

change in income
B.

changes in the number of buyers
C.

changes in future expectations
D.

all of the above.

----------------------------------------

Question 4:-

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the .

A.

demand curve to the right
B.

supply curve to the right
C.

supply curve to the left
D.

demand curve to the left

: Do the following cause a change in demand (shift in demand curve), change in supply (shift in supply curve), change in quantity demanded (movement along demand curve) or change in quantity supplied (movement along supply curve)?

1) The market for Aquafina water. The price of Dasani increases.

2) The market for ground beef. The price of cow-feed increases

. 3) The market for hamburger patties. The price of hamburger buns decreases.

4) The market for pistols. Republicans fear that a democratic president will initiate new gun control laws making it more difficult to purchase guns.

The primary difference between a change in supply and a change in the quantity supplied is:
Choose one answer.
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.

Question 2
What is the difference between a shortage and scarcity?
Choose one answer.
a. Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level.
b. Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages.
c. A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case.
d. There is no distinction between the two. They are the same thing.

Question 3
A decrease in supply means:
Choose one answer.
a. a shift to the left of the entire supply curve.
b. moving downward (to the left) along the supply curve with lower prices.
c. less will be demanded at every price.
d. more will be supplied at every price.

Question 4
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
Choose one answer.
a. an increase; an increase
b. an increase; a decrease
c. a decrease; an increase
d. a decrease; a decrease

Question 5
After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a( n ):
Choose one answer.
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.

Question 6
There is equilibrium in the market when:
Choose one answer.
a. there is no shortage.
b. there is no surplus.
c. price is established where the supply curve and the demand curve intersect.
d. all of the above are true.

Question 7
Which would not cause the supply curve to shift?
Choose one answer.
a. a change in technology
b. a change in factor costs
c. a change in the price of the good
d. a change in the prices of related goods

Question 8
Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:
Choose one answer.
a. an increase in the demand for potatoes.
b. an increase in the quantity of potatoes demanded.
c. a decrease in the demand for potatoes.
d. no change in the demand for potatoes.

Question 9
Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?
Choose one answer.
a. The equilibrium price and quantity rise.
b. The equilibrium price rises and the equilibrium quantity falls.
c. The equilibrium price and quantity fall.
d. The equilibrium price falls and the equilibrium quantity rises.

Question 10



A temporary price of $2 in this market would result in:
Choose one answer.
a. a surplus of 8,000 bushels.
b. a shortage of 8,000 bushels.
c. a shortage of 10,000 bushels.
d. a surplus of 10,000 bushels.

Question 11
The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?
Choose one answer.
a. The equilibrium price falls, and the equilibrium quantity rises.
b. The equilibrium price rises, and the equilibrium quantity falls.
c. The equilibrium price and quantity rise.
d. The equilibrium price and quantity fall.

Question 12
A market surplus occurs if the:
Choose one answer.
a. price is below the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the actual price.
d. equilibrium price is below the actual price.