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ECON 3411 Lecture Notes - Lecture 13: Economic Equilibrium

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School
York University
Department
Economics
Course
ECON 3411
Professor
Ying Kong

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Document Summary

Topic: changes in demand: i(cid:374)(cid:272)rease i(cid:374) de(cid:373)a(cid:374)d o(cid:374)l(cid:455) Increase equilibrium quantity: de(cid:272)rease i(cid:374) de(cid:373)a(cid:374)d o(cid:374)l(cid:455) Decrease equilibrium quantity: e(cid:454)a(cid:373)ple of (cid:272)ha(cid:374)ge i(cid:374) de(cid:373)a(cid:374)d. Suppose that consumer incomes are projected to increase 2. 5% and the number of individuals over 25 years of age will reach an all time high by the end of next year. What is the impact on the rental car market. Changes in supply: i(cid:374)(cid:272)rease i(cid:374) suppl(cid:455) o(cid:374)l(cid:455) Increase equilibrium quantity: de(cid:272)rease i(cid:374) suppl(cid:455) o(cid:374)l(cid:455) Decrease equilibrium quantity: e(cid:454)a(cid:373)ple of (cid:272)ha(cid:374)ge i(cid:374) suppl(cid:455) Suppose that a bill before congress would require all employers to provide health care to their workers. Simultaneous shifts in supply and demand: suppose that si(cid:373)ulta(cid:374)eousl(cid:455) the follo(cid:449)i(cid:374)g e(cid:448)e(cid:374)ts o(cid:272)(cid:272)ur: An earthquake hit kobe, japan and decreased the supply of fermented rice used to make sake wine. Event: the wsj reports that the prices of pc components are expected to fall by. Scenario 1: you manage a small firm that manufactures pcs.

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Related Questions

A ban was imposed on the export of oranges to EconoLand. As the Minister of Agriculture you are concerned that this ban could result in a shortage of oranges. Your advisors provide the following recommendations: · Advisor 1: impose a binding price ceiling. · Advisor 2: impose a binding price floor. · Advisor 3: take no action at all.

Determine with regard to demand, supply, price and quantity:

(i) The impact of the ban on the market for oranges in EconoLand.

(ii) The impact on the market for oranges in EconoLand if each recommendation is implemented.

Your answer options for each one of demand, supply, price and quantity are:

  • Decrease toward Equilibrium
  • Increase Equilibrium price
  • Excess Supply
  • Decrease Equilibrium price
  • No Impact
  • Increase Equilibrium quantity
  • Increase toward equilibrium
  • Decrease Equilibrium quantity
  • Change in price uncertain
  • Shift inwards/ to the left
  • Excess Demand
  • Change in quantity uncertain
  • Shift outward/ to the right

1. A change in quantity supplied:

A. refers to a shift in the supply curve.

B. results from a change in a determinant of supply.

C. refers to a movement along a given supply curve.

D. is caused by a change in the number of sellers in the industry.

 

2. Which one of the following would most likely cause the supply curve for microwaves to shift to the right:

A. a decrease in the price of microwaves.

B. an increase in the wage rate earned by workers who produce microwaves.

C. a decrease in consumer preferences for microwaves.

D. an increase in the number of firms that produce microwaves

 

3. If the actual price sellers are pricing their goods at is currently above the equilibrium price. There is a ____________. Therefore, we would expect sellers to ____________ the price until the market reaches equilibrium.

A.

surplus; raise
B.

surplus; lower
C.

shortage; raise
 

D. shortage; lower

4. Suppose the demand and the supply of wine both increase. The net effect of these changes in demand and supply will be

A

an increase in equilibrium quantity, but a decrease in equilibrium price.
B

an increase in equilibrium price and quantity.
C.

an increase in equilibrium price, but the change in equilibrium quantity is indeterminate.
D.

an increase in equilibrium quantity, but the change in equilibrium price is indeterminate.

 

QUESTION 1

The demand for oranges increases while the supply decreases. The equilibrium price of oranges ________, and the equilibrium quantity ________.

falls; increases

falls; perhaps changes but we can't say if it increases, decreases, or stays the same

rises; decreases

rises; perhaps changes but we can't say if it increases, decreases, or stays the same

1 points

QUESTION 2

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity is ________.

rises; increases

falls; decreases

falls; does not change

rises; does not change

1 points

QUESTION 3

Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the equilibrium quantity of cream cheese ________.

does not change; does not change

rises; increases

falls; decreases

rises; decreases

1 points

QUESTION 4

If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.

rise; increase

rise; decrease

fall; increase

fall; decrease

1 points

QUESTION 5

Which of the following shifts the supply curve for oranges?

an increase in income for all orange consumers if oranges are a normal good

disastrous weather that destroys about half of this year's orange crop

an increase in the price of bananas, a substitute in consumption for oranges

a newly discovered increase in the nutritional value of oranges

1 points

QUESTION 6

Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)

normal goods in production.

an exceptionally cold summer that killed much of the rutabaga crop.

a fall in the price of fertilizer used to grow rutabagas.

an increase in the price of a rutabaga

1 points

QUESTION 7

Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to

an increase in the supply electric cars so that the supply curve shifts rightward.

an increase in the supply of electric cars so that the supply curve shifts leftward.

a decrease in the supply of electric cars so that the supply curve shifts rightward.

a decrease in the supply of electric cars so that the supply curve shifts leftward.

1 points

QUESTION 8

Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then

the demand for hot dogs will increase.

the demand for hot dog buns will decrease.

the quantity demanded of hotdogs will decrease.

the demand for hot dog buns will increase.

1 points

QUESTION 9

Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________.

upward; increases

downward; decreases

upward; decreases

downward; increases

1 points

QUESTION 10

Water bottlers announce that next month the price of bottled water will rise by 25 percent. Which of the following occurs immediately?

The quantity of bottled water demanded increases.

The demand for bottled water increases.

The quantity of bottled water demanded decreases.

The demand for bottled water decreases.

1 points

QUESTION 11

If the price of carrots is below the equilibrium price, the

quantity supplied of carrots exceeds the quantity demanded and a shortage exists.

quantity demanded of carrots exceeds the quantity supplied and a shortage exists.

quantity supplied of carrots exceeds the quantity demanded and a surplus exists.

quantity demanded of carrots exceeds the quantity supplied and a surplus exists.

1 points

QUESTION 12

Which of the following is true regarding demand?
i. Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same.
ii. Demand refers to one quantity at one time.
iii. "Demand" and " quantity demanded" are the same thing.

both i and ii

i only.

ii only.

iii only.

1 points

QUESTION 13

Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?

There is a shortage, so the price rises and quantity demanded decreases.

There is a shortage, so the price rises and quantity demanded increases.

There is a shortage, so the price falls and quantity demanded increases.

There is a surplus, so the price falls and quantity demanded increases.

1 points

QUESTION 14

The number of corn producers increases, so the supply of corn ________ and the supply curve of corn ________.

decreases; shifts leftward

decrease; shifts rightward

increases; shifts rightward

increases; shifts leftward

1 points

QUESTION 15

Market equilibrium

i. can never occur because there are always people who want a good but cannot afford it.

ii. occurs at the intersection of the supply and demand curves.

iii. is the point where the price equals the quantity.

iii only

ii and iii

ii only

i only

1 points

QUESTION 16

Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?

The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese.

The supply of cheese decreases.

The supply of cheese stays the same and there is no change in the quantity supplied of cheese.

The supply of cheese increases.

1 points

QUESTION 17

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the

demand for Dell computers decreases.

demand for Apple computers increases.

demand for Apple computers decreases.

demand for Dell computers increases.

1 points

QUESTION 18

Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a

surplus, so the price rises and quantity demanded increases.

shortage, so the price rises and quantity demanded decreases.

surplus, so the price falls and quantity demanded increases.

shortage, so the price falls and quantity demanded increases.

1 points

QUESTION 19

Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?

The supply increases so that the supply curve shifts rightward.

The quantity supplied increases but there is no shift in the supply curve.

The supply decreases so that the supply curve shifts leftward.

The quantity supplied decreases but there is no shift in the supply curve.

1 points

QUESTION 20

In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?

The store is trying to increase its customers' demand for the product.

The law of demand is being used to increase the quantity demanded.

The store manager must be trying to drive away customers by selling low quality products.

The store is trying to increase its consumer's incomes by increasing their purchasing power.

1 points

QUESTION 21

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________.

rises; increases

rises; decreases

falls; increases

falls; decreases

1 points

QUESTION 22

If both the supply and demand curves shift simultaneously, we can always predict what will happen to

either the price or the quantity, but not both.

only the quantity.

only the price.

both the price and the quantity.

1 points

QUESTION 23

If income increases and the demand for bus rides decreases,

bus rides are a substitute good.

consumers are behaving irrationally.

bus rides are an inferior good.

bus rides are a normal good.

1 points

QUESTION 24

A surplus of cardboard boxes means that

at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium..

the current price of a cardboard box is less than the equilibrium price.

at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.

at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.

1 points

QUESTION 25

If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ________ and the equilibrium quantity ________.

rises; increases

rises; decreases

falls; increases

falls; decreases

1 points