ECON 213 InQuizitive 3 The Market at Work Assignment solutions complete answers

ECON 213 InQuizitive 3 The Market at Work Assignment solutions complete answers 

Chapter 3: The Market at Work: Supply and Demand 

 

Assuming apples and pears are substitutes, what is the most likely effect on the demand for apples if the price of pears rises?

 

Fill in the blanks to illustrate how the market corrects itself when it is out of equilibrium.

If there is currently a shortage of coffee in the economy, then the –Press Space to open
quantity supplied
quantity demanded
law of supply and demand
increase
law of demand
decrease
law of supply
 is greater than the –Press Space to open
quantity supplied
quantity demanded
law of supply and demand
increase
law of demand
decrease
law of supply
. According to the –Press Space to open
quantity supplied
quantity demanded
law of supply and demand
increase
law of demand
decrease
law of supply
, in order for the market to reach equilibrium, the price must –Press Space to open
quantity supplied
quantity demanded
law of supply and demand
increase
law of demand
decrease
law of supply
.

 

Which phrases would an economist use to describe the panic that created shortages during spring 2020 in the toilet paper aisles across most of America? Which ones are not correct?

 

Fill in the blanks to complete the statement comparing taking public transportation, which is typically cheaper but crowded, and using a rideshare for transportation to and from work. In this question, suppose that using your own vehicle is not an option.

Since getting to work on a crowded bus or train is an –Press Space to open
complementary
normal
increase
inferior
decrease
 good compared with using a rideshare such as Uber or Lyft, we should expect that as income increases, the demand for taking public transportation should –Press Space to open
complementary
normal
increase
inferior
decrease
. On the other hand, an Uber/Lyft ride is a –Press Space to open
complementary
normal
increase
inferior
decrease
 good. We should expect an increase in income to –Press Space to open
complementary
normal
increase
inferior
decrease
 the demand for Uber/Lyft rides.

 

Which of the following statements is true or false about firms in imperfect markets and firms in highly competitive markets?

 

The market for flip-flop shoes is shown in the graph. Determine which of the following statements match the different market prices as shown in the graph.

 

Fill in the blanks to complete the statement about Adam Smith’s description of a market economy.

According to Adam Smith, people are motivated by their own –Press Space to open
supply and demand
competitive and imperfect markets
tastes
self-interest
an invisible hand
prices
 to be as productive as possible when providing goods and services. In a market economy, the interaction between –Press Space to open
supply and demand
competitive and imperfect markets
tastes
self-interest
an invisible hand
prices
 results in –Press Space to open
supply and demand
competitive and imperfect markets
tastes
self-interest
an invisible hand
prices
 that influence the choices of consumers and firms. Goods and services are then exchanged, and resources are allocated to their highest-valued use as if guided by –Press Space to open
supply and demand
competitive and imperfect markets
tastes
self-interest
an invisible hand
prices
.

 

Zoe buys 50 pounds of frozen peaches each month to make her famous peach cobbler that she sells in her bakery. If Zoe believes that the price of frozen peaches is going to increase by 50% next month, then her current demand for frozen peaches should increase.

 

Fill in the blanks to complete the following description of the graph below.

 

Tacos are a popular food choice of college students. The demand for tacos in a local college town was at D1 originally with an equilibrium market price of –Press Space to open
supply
cheese nachos (a complement)
$4
quantity supplied
$1
$3
475
125
hamburgers (a substitute)
725
. The market demand shifted to D2 when –Press Space to open
supply
cheese nachos (a complement)
$4
quantity supplied
$1
$3
475
125
hamburgers (a substitute)
725
 increased in price. At the new market equilibrium price, the –Press Space to open
supply
cheese nachos (a complement)
$4
quantity supplied
$1
$3
475
125
hamburgers (a substitute)
725
 increased by –Press Space to open
supply
cheese nachos (a complement)
$4
quantity supplied
$1
$3
475
125
hamburgers (a substitute)
725
.

 

An approaching snowstorm prompts many consumers to want to buy snow shovels. Unfortunately, one of the local snow shovel factories recently burned down, so supplies of shovels are running low. As a result of these circumstances, both supply and demand shift. Click on the area of the graph most likely to contain the new equilibrium price (P2) and quantity (Q2).

 

José is a typical college student and today is his birthday. His grandma sent him a birthday card with $100 inside. With this new income, he has to make various choices about what goods to spend his birthday money on.

Select whether José’s options are best described as a normal or inferior good now that his income has increased by $100.

 

During the COVID-19 pandemic, hand hygiene became recognized as a viable prevention method. This increased the market demand for hand sanitizers. To help meet the increased demand in the market, suppliers must also consider how other factors that are specific to their production can influence how much they produce.

Identify the impact of each factor below on the original market supply curve, S1, as leading either to a decrease or an increase in the market supply of hand sanitizers.

 

In a local beach town, there are many small shops that make surfboards out of polystyrene foam. The market for surfboards is currently at S0 and D0, but changes in the market can shift the supply to the left or right. According to the graph, which market change(s) will cause the market equilibrium to increase to $110?

 

In the Texas college town of “Big Cow University,” hamburgers are a popular choice for the college students. Given the graph below, which of the following changes in the market would result in a shift in the demand of hamburgers for college students from D1 to D2?

 

When a change in the supply and demand occur within a market, the effect on the new equilibrium market price or quantity can be determined. However, without information on the relative size of these shifts, both price and quantity cannot be determined.

Match the supply and demand changes to the outcome that is known about the new equilibrium in the market for pizza, where pizza is a normal good and cheese and dough are inputs.

 

Consider the market for iPads and the market for Android tablets. These two goods are substitutes. Suppose the price of an iPad goes up by $20 when a major online retailer changes its sales policies. Which of the following will occur?

 

Fill in the blanks to complete the statement about market power.

In the United States, –Press Space to open
as customers would be willing to pay
pharmaceutical
a competitive
agriculture
as it wants
an imperfect
 companies can apply for patents, which allow them to be the sole provider of certain vaccines. This is an example of –Press Space to open
as customers would be willing to pay
pharmaceutical
a competitive
agriculture
as it wants
an imperfect
 market, because in this case the company holds the rights to be the only supplier for the entire market. Therefore, it can charge as high a price –Press Space to open
as customers would be willing to pay
pharmaceutical
a competitive
agriculture
as it wants
an imperfect
.

 

Which of the following could be expected to cause a shift in the demand curve for men’s jeans?

 

Consider the following supply schedule for a coffee shop:

Price of coffee per cup
Number of cups supplied
$7.00
100
$6.00
80
$5.00
60
$4.00
40
$3.00
20
$2.00
0
If the price of a cup of coffee increases from $3.00 to $5.00, how many additional cups will the coffee shop supply?

 

Which of the following could change the equilibrium price of gasoline?

 

Which of the following goods or services can be allocated by markets in a market economy?

 

Consider the following demand and supply schedules for coffee. What is the price when the market is in equilibrium?

 

“Shortage” and “scarcity” mean the same thing.

 

Suppose that a factory’s supply curve is shown by the yellow line labeled S1. The workers threaten to go on strike, and the factory owner agrees to increase their wages. Show the impact on supply after the wages go up by clicking on the appropriate curve. If there is no shift, select S1.

 

Which items represent examples of Adam Smith’s “invisible hand” at work?

 

Consider the demand schedule for salmon in a market with two consumers, Derek and Meredith: What is the quantity demanded by the market at a price of $12.50 per pound?

 

1.
Apply the correct label to each situation:


1. Pumpkins: an early frost destroyed much of the pumpkin crop. A newspaper reports zucchini is better for pie than pumpkin.
2. Corn: news media run stories about people with corn allergies. The corn crop is unusually large.
3. Taxis: public transit workers at a popular tourist attraction go on strike as a holiday weekend approaches
4. Gasoline: a new housing development goes up. Several new gas stations are built nearby
 
 
2.
Consider the market for caramel and butterscotch ice cream toppings. For each price change, identify the likely effect on the demand curve for caramel topping.
1. The price of caramel topping decreases
2. The price of ice cream increases
3. The price of butterscotch topping increases
 
 
3.
Consider the market for tablet (like iPads and Android tablets). Suppose the average price of an iPad goes up by $20 when a major online retailer changes its sale policies. Which of the following will occur?
a) the supply curve for iPads will shift
b) the price of Android tablets will increase
c) the demand for Android tablets will increase
d) the supply curve for Android tablets will shift
e) the demand curve for iPads will shift
 
 
4.
For a Honda Accord, some factors shift demand left and others shift it right, as shown. Classify each factor by how it shifts the current demand curve to a new position. 

1. Big sale coming in three months
2. Consumers' income increases by 10%
3. Free brake inspections
4. 2% rebate on a Toyota Camry, a substitute good
 
 
5.
How do you find what the price for something is when the market is in equilibrium?
 
 
6.
Fill in the blanks to illustrate how the market corrects itself when it is out of equilibrium. If there is currently a shortage of coffee in the economy, then the       is greater than the      . According to the        , in order for the market to reach equilibrium, the price must       .
 
 
8.
Match each inventory situation to the market condition with which it is associated.
Shortage, surplus, inventory depletion, inventory buildup
 
 
9.
Place in order the stages of a market experiencing a shortage and then regaining equilibrium.
 
 
10.
Fill in the blanks to complete the statement contrasting competitive and imperfect markets. Rural Internet access, with one dominant provider that faces very little competition, is a good example of         market. It functions as       . By contrast, a flea market or swap meet, where        buyers and sellers get together to conduct transactions, is an example of        market. No single         exerts          control over prices.
 
 
11.
Fill in the blanks to complete the statement comparing used cars and new cars. Since used cars are         goods compared with new cars, we should expect that as income increases, the demand for used cars should      . On the other hand, new cars are        goods. We should expect an increase in income to         the demand for new cars.
 
 
 

12.
Suppose that both the number of buyers and the number of sellers increase. Which of the following will occur?
 
 
13.
Fill in the blanks to complete the following sentence. Suppose that Seattle’s city government decides to increase the minimum wage for coffee shop baristas. This would         the supply of coffee by altering the         
 
 
14.
Suppose that the supply of automobiles is given by the equation P= -5000 + 2000Q where P is the price in dollars and Q is the quantity of cars. At a price of $23,000 each, how many cars will be supplied?
 
 
15.
Suppose the government believes that there are too many cigarettes in the market. Which of the following policies could the government implement to decrease the supply of cigarettes?
a) tax the tobacco crop
b) tax consumers on the purchase of cigarettes
c) subsidize tobacco farmers, thus lowering the price of tobacco
d) tax the manufacturing of cigarettes
 
 
16.
Fill in the blanks to complete the statement about the demand for eggs. Suppose the price of eggs decreases from $5 per dozen to $4 per dozen. According to the law of       , we should expect the           to increase.
 
 
17.
Suppose there are seven coffee shops located on the same busy street. If two of the coffee shops close, which of the following will occur, holding all else fixed?
a) the price of coffee will increase
b) the supply of coffee will decrease
c) the demand for coffee will decrease
d) the supply of coffee will increase, since the remaining shops will sell more than before
 
 
18.
Fill in the blanks to complete the following statement regarding the relationship between price and supply. Suppose there is a 10% rise in the price of gasoline. Then, according to the law of       , we expect the quantity of gasoline supplied to        . Conversely, if the price goes         , quantity supplied will       , as well
 
 
19.
If Zoe believes that the price of apples is going to increase by 50% in four weeks, then her current demand for apples should increase.
 
 
20.
In a scenario where we expect a shift in both supply and demand, if the demand for a product increases, the price will always increase.
 
 
21.
Sellers set the demand for a product, while the buyers set the supply
 
 
22.
What is the most likely effect on the demand for apples if the price of pears rises?
 
 
23.
Which of the following are true regarding competitive markets?
a) removing a buyer will significantly alter the demand
b) individual buyers do not have significant influence on the price
c) forces of supply and demand significantly affect consumer and producer behavior
d) individual sellers do not have significant influence on the price
e) removing a seller will significantly alter the supply
 
 
 

24.
Which of the following could change the equilibrium price of gas?
a) Summer weather encourages people to drive more
b) A hurricane destroys an oil refinery
c) A newspaper runs a story on the history of the petroleum industry
d) A gas station does a week-long "free car wash with 10-gallon purchase" promotion
 
 
25.
Which of the following goods or services can be allocated in a market economy
 
 
 

1.
Fill in the blanks to complete the statement about Adam Smith’s description of a market economy. According to Adam Smith, people are motivated to be as productive as possible based on their own        . In a market economy,         respond to both         . Goods and services are then exchanged, and resources are allocated to their highest-valued use as if guided by        .
 
 
2.
According to Adam Smith, resources are allocated through a market economy to their highest-valued use as if guided by an invisible hand. Put the market for gold in order as prescribed by this concept.
 
 
3.
Consider the market for gasoline. Suppose that a new oil-pump technology is developed, making gasoline production less costly. At the same time, war breaks out and several oil fields are destroyed. What will be the effect on supply?
 
 
5.
Consider two goods that are substitutes. A price increase for one good will cause the quantity demanded of that good to . The quantity demanded of the substitute good will . When two goods are complements of each other, a price  for either product will cause  of both goods to decline.
 
 
6.
The formula for price elasticity of supply is:
 
 
7.
How does an increase of income affect spending on necessities and luxuries?
 
 
8.
How does the existence of substitutes affect the price elasticity of demand?
 
 
9.
If a business sees that demand for its product is , it makes sense to lower the price in order to  revenue. However, if demand is , lowering the price will not increase revenue.
 
 
10.
If demand for oil increases, what can we assume about the price elasticity of supply and demand?
 
 
11.
If the price of oceanfront property increases, the quantity for land will stay the same. As a result, the price elasticity of will be .
 
 
13.
In the run, a producer may have difficulty increasing its , which makes supply . However, in the run the producer may be able to increase the quantity supplied to make its supply more. As time moves from the immediate run onward, suppliers become more .
 
 
14.
Jenna is looking to buy a new computer. When would the price elasticity of demand be more elastic for her computer? Order the situations from most inelastic to most elastic.
 
 
15.
Fill in the blanks to complete the statement describing market equilibrium. The market-clearing price for cantaloupes is the price at which the quantity supplied equals the       . If the market price is too high, then there is a      . If the market price is too low, then there is a         .
 
 
16.
The price elasticity of equals the percentage change in divided by the percentage change in . When the percentage change in the quantity demanded is larger than the percentage change in price, the demand is .
 
 
 

18.
A simple calculation of the price elasticity of demand will yield results depending on whether one considers the change as going from (Q1, P1) to (Q2, P2) or in the reverse direction. The midpoint method gives the same answer either way, because it uses price and  quantity as the basis for the change calculations.
 
 
21.
Suppose that due to unfavorable growing conditions, this year's global coffee crop was unusually small. What can we assume about the short-run price elasticity of supply and demand for coffee?
 
 
25.
Suppose there are five buyers in a market. Which of the following represents the market demand?
 
 
28.
If the holiday season is coming up in a couple of weeks, an electronics manufacturer is likely to hire more workers to help increase the supply today.
 
 
31.
Individuals purchase inferior goods out of necessity, rather than choice.
 
 
33.
"Shortage" and "scarcity" mean the same thing.
 
 
34.
The cross-price elasticity of demand for jeans and textbooks is zero, because the two products have no particular relationship.
 
 
35.
The law of supply applies to normal goods, but not inferior goods.
 
 
36.
Total revenue is calculated by subtracting the total costs from the price.
 
 
37.
You can expect the price elasticity of demand to be more elastic for a car than for a restaurant meal.
 
 
 

38.
What are some strategies producers can use to maintain an elastic supply?
 
 
39.
What are the determinants of the price elasticity of supply?
 
 
40.
What correctly describes the income elasticities of necessities?
 
 
41.
What does the price elasticity of supply measure?
 
 
42.
What is the most likely effect on the price of apples if the price of pears increases?
 
 
43.
When consumers are unresponsive, what does that mean?
 
 
44.
When consumers have more money, they are likely to purchase inferior goods. This means that elasticity of demand is : as income goes up, quantity demanded goes.
 
 
45.
When the price of a necessity increases, demand is likely to be because consumers that product to survive. However, when the price of a luxury good increases, consumers may because the good is not crucial to survival. Thus, the demand would be .
 
 
46.
When you are using the price elasticity of demand equation, what does it mean when you obtain a zero in the numerator?
 
 
47.
Which determinants influence whether demand is elastic or inelastic?
 
 
49.
Which of the following are true regarding imperfect markets?
 
 
50.
Which of the following could be expected to cause a shift in the demand curve for men’s jeans, assuming jeans are a normal good?
 
 
53.
Which products would you expect to have a higher price elasticity of demand? Order them from most inelastic to most elastic.
 
 
 

54.
Why might a producer price its product at a price point far lower than its competitors?
 
 
 

2.
According to Adam Smith, resources are allocated through a market economy to their highest-valued use as if guided by an invisible hand. Put the market for gold in order as prescribed by this concept.
 
 
3.
An approaching snowstorm prompts many consumers to want to buy shovels. Unfortunately, the local shovel factory recently burned, so supplies of shovels are running low. Click on the area of the graph most likely to contain the new equilibrium price and quantity.
 
 
4.
Consider the demand schedule for salmon in a market with two consumers, Derek and Meredith:
 
 
6.
Consider the market for gasoline. Suppose that a new oil-pump technology is developed, making gasoline production less costly. At the same time, war breaks out and several oil fields are destroyed. What will be the effect on supply?
 
 
8.
Consider the supply curve for bottles of soda. Identify each event as causing either a shift in supply or a movement along the supply curve.
 
 
10.
Drag the items to classify each event as movement along the demand curve or a demand curve shift. The good is fertilizer for flowering plants.
 
 
13.
Identify each good as being either a normal good or an inferior good.
 
 
 

20.
Match each shifter of demand with an example. Jack is fired from his management job and takes a job as a clerk. Rumors circulate about coming price cuts on a popular electronic device. Lowered price on a smartphone drives up demand on accessories for that phone. A stylish new electric car with impressive performance changes consumer perceptions about electric vehicles.
 
 
21.
One autumn, the weather is perfect for growing pumpkins, and the pumpkin crop is much larger than usual. Meanwhile, when Halloween approaches, jack-o'-lanterns turn out to be less popular than in prior years. Instead, consumers spend more on costumes. What will happen to the price of pumpkins around Halloween, compared with last year?
 
 
26.
"Shortage" and "scarcity" mean the same thing.
 
 
 

35.
What is the most likely effect on the price of apples if the price of pears increases?
 
 
39.
Which of the following could change the equilibrium price of gas?