8
Questions Project-
1) Law of Demand states that:
A.
with the increase in price Quantity increases
B.
with the increase in price quantity decreases other things remaining the same.
C.
quantity does not change with any increase in price.
D.
All of the above.
Law of demand states that other things remaining the same every increase in price causes the
quantity to be decreased and vice versa.
2) What happens to the equilibrium price if the demand curve shifts to the right and
the supply curve does not shift?
The equilibrium price will rise.
3) a. Is there a shortage or surplus when the price equals $.38?
Price per Pound
$.38
$.37
$.36
$.35
Quantity Supplied
1,500
1,000
700
600
Quantity Demanded
525
600
700
900
$.34
550
There is a surplus; quantity supplied exceeds quantity demanded.
1200
b. What about $.34?
Here there is a shortage; quantity demanded exceeds quantity supplied.
c. What are the equilibrium price and quantity?
p e  .36
q e  700
4) If the cost of making bicycles falls, the price goes down, causing the demand curve
to shift to the right.
True
False
5) True or false? "If the price of a good falls, demand increases."
The statement is false. If the price of a good falls, quantity demanded is increased
(=movement along the demand curve).
6) Demand = 2200 - 200P
(P = Price)
Supply = 800 + 500P
Calculate the equilibrium price and the equilibrium quantity.
Equilibrium: Demand = Supply
2200 - 200P = 800 + 500P
1400 = 700 P
P (Price)= 2
Q (Quantity) = 1800
1__ Quantity Demanded
The Quantity buyers are willing and able to
buy at a specific price during a particular
period
2.__ Demand Schedule
A table that shows the quantites of a good or
service demanded at different prices during
3.__ Demand Curve
a particular period.
Shows us the relationship between the price
and quantity demanded of a good or service
during a particular period.
4.__ Change in quantity demanded
The movement along a demand curve that
results from a change in price.
5__ Quantity Supplied
The quantity sellers are willing to sell at a
particular price during a particular period
6__ Supply Curve
Shows us the relationship between price and
quantity supplied during a particular period.
7__ Change in quantity supplied
A movement along the supply curve that
results from a change in price.
8__ Change in supply
A change in the quantity supplied at each
price.
7) If the demand and supply curve for computers are:
D = 100 - 6P, S = 28 + 3P
where P is the price of computers, what is the quantity of computers bought and sold at equilibrium.
Answer: We know that the equilibrium quantity will be where supply meets, or equals, demand. So first w
100 - 6P = 28 + 3P
If we re-arrange this we get:
72 = 9P
which simplifies to P = 8.
Now we know the equilibrium price, we can solve for the equilibrium quantity by simplying substituting
equation. I'll substitute it into the supply equation:
S = 28 + 3*8 = 28 + 24 = 52.
Thus the equilibrium price is 8, and the equilibrium quantity is 52.