Lesson 7 - shifting the supply and demand curve - power point - duke
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The document contains information about the demand and supply of Binxy cats. It includes the original demand curve (D) and supply curve (S) with corresponding price and quantity data. It then describes two scenarios that result in shifts to the curves. The first scenario is a change in tax rates that increases disposable income and shifts the demand curve (D1) to the left, indicating buyers will purchase smaller quantities at each price. The second scenario is a rise in beef prices, a production cost, that shifts the supply curve (S1) upward, as suppliers will produce smaller quantities at each price.
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The document discusses demand analysis, including the definition of demand, types of demand, factors determining demand, and laws related to demand such as the law of demand and its assumptions. It also discusses the relationship between demand and factors like price, income, and substitution effects. Finally, it covers concepts related to supply such as the law of supply which states that suppliers will provide more goods at higher prices.
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Managerial economics deals with applying economic concepts and methodologies to help managers make rational decisions. It bridges the gap between economic theory and business practices. While traditional economics studies broad economic principles, managerial economics focuses on microeconomic problems faced by individual firms. It uses tools from decision science and economics to identify issues, organize information, and evaluate alternatives to find optimal solutions for business problems. The goal of managerial economics is to help managers achieve organizational objectives efficiently by making well-informed choices.
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1. Utility theory includes the law of diminishing marginal utility and the law of equi-marginal utility. The law of diminishing marginal utility states that the marginal utility of consuming successive units of a good decreases as consumption increases.
2. Marginal utility refers to the satisfaction gained from consuming an additional unit of a good. It decreases with increasing consumption as wants are satisfied. The total utility initially increases with consumption but eventually reaches a point where marginal utility is zero and additional units provide no added satisfaction.
3. An example of diminishing marginal utility is drinking water when thirsty. The first glass provides the most satisfaction while additional glasses provide less satisfaction until the point where more water would provide disutility rather than
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1. The market for ice cream isa.a monopolistic market.b.a h.docx
1. The market for ice cream is
a. a monopolistic market.
b. a highly competitive market.
c. a highly organized market.
d. both (b) and (c) are correct.
2.An increase in quantity demanded
a. results in a movement downward and to the right along a fixed demand curve.
b. results in a movement upward and to the left along a fixed demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.
Figure 3
3. Refer to Figure 3. At a price of $15,
a. quantity demanded exceeds quantity supplied.
b. there is a shortage.
c. there is an excess demand.
d. All of the above are correct.
Figure 4
The diagram below pertains to the supply of paper in university markets.
4. Refer to Figure 4. All else equal, an increase in the use of laptop computers for note-taking would cause a move
a. from x to y.
b. from y to x.
c. from SA to SB.
d. from SB to SA.
5. When demand is inelastic the price elasticity of demand is
a. less than 1, and price and total revenue will move in the same direction.
b. less than 1, and price and total revenue will move in opposite directions.
c. greater than 1, and price and total revenue will move in the same direction.
d. greater than 1, and price and total revenue will move in opposite directions.
6. A price floor will be binding only if it is set
a. equal to the equilibrium price.
b. above the equilibrium price.
c. below the equilibrium price.
d. either above or below the equilibrium price.
7. When a tax is placed on the buyers of cell phones,
a. the size of the cell phone market and the price paid by buyers both decrease.
b. the size of the cell phone market decreases, but the price paid by buyers increases.
c. the size of the cell phone market increases, but the price paid by buyers decreases.
d. the size of the cell phone market and the price paid by buyers both increase.
8. Which of the following statements is correct?
a. For all firms, marginal revenue equals the price of the good.
b. Only for competitive firms does average revenue equal the price of the good.
c. Marginal revenue can be calculated as total revenue divided by the quantity sold.
d. Only for competitive firms does average revenue equal marginal revenue.
9. When a profit-maximizing firm is earning profits, those profits can be identified by
a. P Q.
b. (MC - AVC) Q.
c. (P - ATC) Q.
d. (P - AVC) Q.
Scenario
Consider a transportation corporation named C.R. Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment, due to the profitability of the corporation.
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This document contains a microeconomics quiz with multiple choice and true/false questions that assess fundamental microeconomic concepts such as scarcity, demand and supply, equilibrium, opportunity cost, and production possibilities frontiers. It also includes sample exam questions requiring the use of demand/supply diagrams and production possibilities frontier graphs to illustrate economic scenarios and analyze shifts in equilibrium.
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This document summarizes the key concepts of supply and demand. It defines markets as groups of buyers and sellers and explains that supply and demand refer to how people interact in markets. The four types of market structures are also defined. The document then explains the demand curve, factors that shift the demand curve, market demand, and the difference between changes in quantity demanded versus changes in demand. Similar concepts of the supply curve, determinants of supply, and changes in supply versus quantity supplied are outlined. The document concludes by explaining market equilibrium and how changes in supply or demand can shift equilibrium price and quantity.
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Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800
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$200
$500
$1,000
$1,000 plus the value of her time
2. Where do economic agents such as individuals, firms and nations, interact with each other? (Points : 1)
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These statements suggest that (Points : 1)
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the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job due to other causes.
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gross earnings
pure profit
marginal costs
net benefit
6. A successful market economy requires well defined property rights and (Points : 1)
balanced supplies of all factors of production.
an ind.
ECO 2003Multiple ChoiceIdentify the choice that best com.docx
ECO 2003
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. A surplus results when a
a. nonbinding price floor is imposed on a market.
b. nonbinding price floor is removed from a market.
c. binding price floor is imposed on a market.
d. binding price floor is removed from a market.
Figure 6-3
Panel (a)Panel (b)
quantity
quantity
____
2. Refer to Figure 6-3. A nonbinding price floor is shown in
a. both panel (a) and panel (b).
b. panel (a) only.
c. panel (b) only.
d. neither panel (a) nor panel (b).
Figure 6-6
____
3. Refer to Figure 6-6. If the government imposes a price ceiling of $12 on this market, then there will be a. no shortage.
b. a shortage of 10 units.
c. a shortage of 20 units.
d. a shortage of 40 units.
Figure 6-9
____
4. Refer to Figure 6-9. At which price would a price ceiling be binding? a. $4
b. $5
c. $6
d. $7
Figure 6-11
____
5. Refer to Figure 6-11. Which of the following statements is not correct?
a. A government-imposed price of $9 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B.
b. A government-imposed price of $15 would be a binding price ceiling if market demand is either Demand A or Demand B.
c. A government-imposed price of $3 would be a binding price ceiling if market demand is either Demand A or Demand B.
d. A government-imposed price of $12 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.
____
6. When a tax is imposed on the sellers of a good, the supply curve shifts
a. upward by the amount of the tax.
b. downward by the amount of the tax.
c. upward by less than the amount of the tax.
d. downward by less than the amount of the tax.
Figure 6-25
Panel (a)Panel (b)
quantity
quantity
Panel (c)
____
7. Refer to Figure 6-25. In which market will the majority of the tax burden fall on buyers? a. market (a)
b. market (b)
c. market (c)
d. All of the above are correct.
Table 7-6
Buyer
Willingness to Pay
Michael
$500
Earvin
$400
Larry
$350
Charles
$300
____
8. Refer to Table 7-6. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men’s NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market? a. one ticket; $100
b. two tickets; $100
c. two tickets; $0
d. three tickets; $0
____
9. Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons? a. Consumer surplus increases.
b. Consumer surplus decreases.
c. Consumer surplus is not affected by this change in market forces.
d. We would have to know whether the demand for lemons is ela ...
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Be chap2 market forces demand
This document provides an overview of supply and demand concepts including:
1. It defines market demand and supply curves and explains how they relate price and quantity.
2. It describes the laws of demand and supply - as price increases, quantity demanded decreases and quantity supplied increases.
3. It explains how shifts in the demand and supply curves can occur due to changes in factors like income, prices of related goods, consumer tastes, and input prices. These shifts represent changes in the overall demand or supply.
Chapter 2
This document provides an overview of market forces including demand, supply, and how prices are determined in a market. It defines key concepts such as the law of demand, law of supply, demand and supply curves, shifts in demand and supply, demand and supply functions, consumer surplus, and producer surplus. Examples and graphs are provided to illustrate these concepts and how changes in factors like price, income, tastes, technology etc. can cause the curves to shift and impact market equilibrium.
ECON 301 Intermediate MacroSpring 2019 Problem Set #1Du.docx
ECON 301: Intermediate Macro
Spring 2019 Problem Set #1
Due: Monday, April 22, 10:30 AM
Directions: Put the names of up to 3 group members at the top of this page.
Please clearly mark each of your answers to the multiple choice questions
in capital letters in the spaces provided below. Please mark your solutions
(preferably typed) to each of the short answer questions on separate sheets
of paper (with clean edges if using notebook paper) and staple or paper
clip your solutions to the multiple choice answer sheet. Hand it in (one per
group) on or before the due date during class time.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
SECTION 1: MULTIPLE CHOICE QUESTIONS
1. Based on your understanding of the aggregate expenditure model, we know with certainty
that an equal and simultaneous increase in G and T will cause:
(a) an increase in output
(b) no change in output
(c) a reduction in output
(d) an increase in investment
(e) a decrease in investment
For the following two questions, suppose an economy produces only milk and butter. As-
sume that all production is consumed in each year, and that price and quantity data are given
in the tables below.
Year 1
Good Quantity Price
Milk 500 $2
Butter 2000 $1
Year 2
Good Quantity Price
Milk 900 $3
Butter 3000 $2
2. (Refer to the above tables) Between Year 1 and Year 2, real GDP (based on Year 1 as a base
year) grew by
(a) 58.18%
(b) 158.18%
(c) 160%
(d) 60%
(e) 260%
3. (Refer to the above tables) Between Year 1 and Year 2, the GDP deflator (based on Year 1
as a base year) rose
(a) 81.25%
(b) 90%
(c) 190%
(d) 83.33
(e) 183.33%
ECON 301: Intermediate Macro Problem Set #1 1
4. Which of the following generally occurs when a central bank pursues expansionary monetary
policy?
(a) the central bank purchases bonds and the interest rate increases
(b) the central bank purchases bonds and the interest rate decreases
(c) the central bank sells bonds and the interest rate increases
(d) the central bank sells bonds and the interest rate decreases
(e) an increase in the reserve requirement ratio
5. The marginal propensity to consume represents
(a) the level of consumption that occurs if disposable income is zero.
(b) the ratio of total consumption to disposable income.
(c) total income minus total taxes.
(d) the change in output caused by a one-unit change in autonomous demand.
(e) the change in consumption caused by a one-unit change in disposable income.
6. Suppose a one-year discount bond offers to pay $1000 in one year and currently has a 15%
interest rate. Given this information, we know that the bond’s price must be approximately:
(a) $870
(b) $1150
(c) $850
(d) $950
(e) $985
7. Equilibrium in the goods market requires that
(a) production equals income.
(b) production equals demand.
(c) consumption equals saving.
(d) consumption equals income.
(e) government spending equals taxes minus transfers.
8. The LM curve shifts down when which of the following occurs.
Consumer & Producer Surplus (Economics)
Consumer surplus is the amount a buyer is willing to pay for a good minus the actual amount paid, representing the benefit to the consumer. Producer surplus is the actual amount received by a seller for a good minus the seller's initial cost, representing the seller's profit. Consumer surplus ideology suggests that if a consumer pays nothing at all for something they need, like a free beer on a hot day, their benefit is maximized because the money they were willing to spend remains with them.
How prices are determined
Demand refers to how much of a good or service consumers are willing and able to purchase at different price levels. Quantity demanded is the total amount consumers want to buy at a given price. Market demand is the sum of all individual demands. Demand curves slope downward, showing an inverse relationship between price and quantity demanded. Supply refers to how much producers are willing to sell at different prices. Quantity supplied is the total amount producers want to sell at a given price. Market supply curves slope upward, showing a direct relationship between price and quantity supplied. Equilibrium occurs where quantity demanded equals quantity supplied, establishing the market price.
The Market Forces of Supply and Demand
This document discusses the economic concepts of supply and demand. It defines key terms like markets, demand curves, determinants of demand and supply, and equilibrium. It explains how supply and demand interact through examples of how changes in demand or supply can shift the curves and impact equilibrium price and quantity. For example, an increase in demand from hot weather leads to a higher equilibrium price and quantity sold of ice cream.
Macroeconomics Assignment Sample
With the collapse of US mortgage market due to sub-prime lending, the global financial system is completely shattered. The UK financial markets were also not able to resist to this economy fall-down. The combination of credit crunch and falling housing market resulted in a recession in the UK market (Richardson, 2011). Recession can be defined as fall in real GDP of a country. Alternatively, it can be defined as, for the two consecutive quarters, if economic growth shows negative trend; i.e. if there is a fall in the real output of the country for consecutively six months (King and Cushman, 1997).
South UniversityVirginia Beach CampusECO2071Name ________.docx
South University
Virginia Beach Campus
ECO2071
Name: ____________________________________________
Score: ______________
Select the CORRECT answer to each question. Each question is worth 2 points.
1. Economics is the study of how society manages its
a.
limited wants and unlimited resources.
b.
unlimited wants and unlimited resources.
c.
limited wants and limited resources.
d.
unlimited wants and limited resources.
2. The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that
a.
equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
b.
equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
c.
equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
d.
equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
3. Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial
a.
only if it allows us to obtain things that we couldn't make for ourselves.
b.
because it allows specialization, which increases total output.
c.
to us if we can gain and the others involved in the trade lose.
d.
in only a limited number of circumstances because others are typically self-interested.
4. A direct or positive relationship exists between a country's
a.
productivity and its standard of living.
b.
amount of government spending and its productivity.
c.
total population and its average citizen’s income.
d.
rate of population growth and the extent of its trade with other countries.
5. Economists, like mathematicians, physicists, and biologists,
a.
make use of the scientific method.
b.
try to address their subject with a scientist’s objectivity.
c.
devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d.
All of the above are correct.
6. Which of the following is an example of a positive, as opposed to normative, statement?
a.
Inflation is more harmful to the economy than unemployment is.
b.
If welfare payments increase, the world will be a better place.
c.
Prices rise when the government prints too much money.
d.
When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.
7. Which of the following is an example of a normative, as opposed to positive, statement?
a.
Universal health care would be good for U.S. citizens.
b.
An increase in the cigarette tax would cause a decrease in the number of smokers.
c.
A decrease in the minimum wage would decrease unemployment.
d.
A law requiri.
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The document discusses the four main factors of production: land, labor, human capital, and capital. It defines each factor and provides examples. It then explains production possibilities graphs and key concepts such as the production possibilities frontier, efficiency, and shifts in the production curve due to more resources or improved technology. It poses questions about tradeoffs illustrated by the graph and opportunity costs of changing production levels. Finally, it provides examples of production possibility graphs comparing guns and butter and instructs students to create their own graph and scenarios.
Lets trade!
The document discusses a classroom trade simulation activity. It provides the rules and goals of the simulation, which are for students to improve their country's economic situation through voluntary trade. The simulation involves students trading goods between themselves and rating their satisfaction after each round, with the rounds restricting trading partners. Background information is given on real world trade patterns and barriers between countries.
Comparative vs. Absolute Advantage
Buying American-made products benefits the US economy in several ways:
1. It keeps American factories operating and American workers employed, preventing job losses.
2. When Americans buy foreign-made products, money flows out of the US economy and to other nations, weakening domestic industries.
3. Buying American supports the long-term strength of the US manufacturing industry and ensures the nation's economic security.
Source of Outsourcing
This document discusses outsourcing and its impacts. It begins with an anecdote from 2014 where an auditor's job was outsourced to India after he trained his replacement. He expresses nervousness about his financial future and other jobs following the same path. The document then discusses both the pros and cons of outsourcing for the US and foreign countries. It notes outsourcing can reduce costs but also lead to job losses domestically and increase inequality abroad due to poor working conditions. Photos show the physical impacts of poverty on one woman's life and job as a garbage collector in India.
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Lesson 7 - shifting the supply and demand curve - power point - duke
- 1. Now shift it out… *
- 2. Price Quantity Demanded .10 350 .15 300 .20 250 .25 200 .30 150 .35 100 .40 50 Binxy Cat Demand Schedule
- 3. * PricesperBinxy Quantity (Millions of Binxys) D .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400
- 4. The data for demand curve D indicates that at a price of .30 per Binxys, buyers would be willing to buy __________ million Binxys. Other things constant, if the price for Binxys increased to .40 per Binxy, buyers would be willing to buy _______ million Binxy. Such a change would be a decrease in____________. Other things constant, if the price of Binxys decreased to .20, buyers would be willing to buy _________ million Binxys. Such a change would be called an increase in _____________________. 150 50 100 million 250 Quantity Demanded
- 5. Price Quantity Demanded .05 300 .10 250 .15 200 .20 150 .25 100 .30 50 Now, let’s suppose there is a dramatic change in Federal income-tax rates that affects the disposable income of Binxy buyers. This change in income will result in a new set of data. Use the data below to plot the new demand curve for Binxys on the front page of this packet. Label the new demand curve D1 and fill in the information below. Demand Shift: D1
- 6. * PricesperBinxy Quantity (Millions of Binxys) D D1 .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400
- 7. Comparing the new demand curve (D1) with the original demand curve (D), we can say that the change in the demand for Binxys results in a shift of the demand curve to the ___________________. Such a shift indicates that at each of the possible prices shown, buyers are now willing to buy a _________________quantity; and at each of the possible quantities shown, buyers are willing to offer a _________________ maximum price. The cause of this demand curve shift was an___________ in tax rates that ____________________ the disposable income of Binxy buyers. left smaller lower increase decreases
- 8. Demand Shift: D2 Now, let’s suppose that there is a dramatic change in people’s tastes and preference for Binxys. This change will result in a new set of data. Use the data below to plot the new demand curve for Binxys on the front of this packet. Label the new demand curve D2 and fill in the information below. Price Quantity Demanded .20 350 .25 300 .30 250 .35 200 .40 150 .45 100 .50 50
- 9. * PricesperBinxy Quantity (Millions of Binxys) D D2 D1 .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400
- 10. Comparing the new demand curve (D2) with the original demand curve (D), we can say that the change in the demand for Binxys results in a shift of the demand curve to the _____________________. Such a shift indicates that at each of the possible prices shown, buyers are now willing to buy a ________________ quantity; and at each of the possible quantities shown, buyers are willing to offer a _________________ maximum price. The cause of this shift in the demand curve was a change in people’s tastes and preference for Binxys. right larger higher
- 11. Supply = Sellers Law of Supply: tendency of suppliers to offer more of a good at a higher price. Price Supply Price Supply
- 12. * Let’s use Binxy Cats……..(page 3)
- 13. * PricesperBinxy Quantity (Millions of Binxys) D .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400 S Equilibrium Price S1 P Q P Q
- 14. * 1. Advances in technology. Examples: LCD and Plasma televisions. PriceofLCD/PlasmaTVs Quantity of televisions sold S S1
- 15. 2. Competition Examples: Cell Phones. Priceofcellphones Quantity of cell phones S S1
- 16. 3. Government Influence Examples: Excise taxes: Causes a decrease in production. Government Subsidies: Cause increase in production. Priceofcigarettes Quantity of cigarettes S S1 Quantity of T-bone Steaks S S1 PriceofT-boneSteaks
- 17. 4. Production Costs Examples: Fixed Costs (Rent). Variable Costs (Heating). PriceofHamburgers Quantity of Hamburgers S S1 S2
- 18. 5. Future Expectations of Price Examples: Sun Screen in January. PriceofSunScreen Quantity of Sun Screen S S1
- 19. *
- 20. Price Quantity Supplied .15 350 .20 300 .25 250 .30 200 .35 150 Binxy Cats Supply Schedule
- 21. * PricesperBinxy Quantity (Millions of Binxys) .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400 S
- 22. Price Quantity Supplied .20 300 .25 250 .30 200 .35 150 .40 100 Now, let’s suppose there is a dramatic change in the price of beef, a main ingredient in Binxys. This rise in the cost of production will result in a new supply curve. Use the data below to plot the new supply curve for Binxys. Label the new supply curve S1 and fill in the information below. Supply Shift: S1
- 23. * PricesperBinxy Quantity (Millions of Binxys) S D1 .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400 S1
- 24. Price Quantity Supplied .20 300 .25 250 .30 200 .35 150 .40 100 Now, let’s suppose there is a dramatic change in the price of beef, a main ingredient in Binxys. This rise in the cost of production will result in a new supply curve. Use the data below to plot the new supply curve for Binxys. Label the new supply curve S1 and fill in the information below. Supply Shift: S1
- 25. * PricesperBinxy Quantity (Millions of Binxys) S .55 .50 .45 .40 .35 .30 .25 .20 .15 .10 .05 50 100 150 200 250 300 350 400 S2
- 26. S S1S S1