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Which of the following statements is debatable? Paul and Julie did not cro...
Jul 3, 2024
Which of the following statements is debatable? Paul and Julie did not cross against the light because the benefits of doing so were less than the costs. The crosswalk light was red and stated “Don’t Walk.” The student crossed against the do not walk sign. The student should not have walked against the do not walk light.
Solution
a
Paul and Julie did not cross against the light because the benefits of doing so were less than the costs. This statement is based on the economic principle of cost-benefit analysis, which is a fundamental concept in Microeconomics
b
The crosswalk light was red and stated “Don’t Walk.” This statement is a factual observation and does not involve any economic analysis
c
The student crossed against the do not walk sign. This statement is also a factual observation and does not involve any economic analysis
d
The student should not have walked against the do not walk light. This statement is normative, meaning it expresses a value judgment or opinion rather than an objective fact. In Microeconomics, normative statements are debatable because they are based on personal values and beliefs
Answer
The student should not have walked against the do not walk light.
Key Concept
Normative Statement
Explanation
Normative statements express opinions or value judgments and are inherently debatable because they are based on personal beliefs rather than objective facts.
Which of the following is a microeconomic topic? The unemployment rate of the United States. The tax increase on gasoline. The Federal Reserve contemplating raising interest rates. The amount of goods consumed by American households this year.
The amount of goods consumed by American households this year is a microeconomic topic. Microeconomics focuses on individual economic units such as households, businesses, and markets, so the consumption behavior of American households falls under this category. It involves analyzing how individual choices and decisions impact the allocation of resources and the overall economy.
Solution
a
Move the dotted line to P=6P = 6: To determine whether the price point P=6P = 6 results in a shortage or surplus, we need to move the dotted line on the graph to the price level of 6
b
Identify Qs and Qd: At P=6P = 6, identify the quantity supplied (QsQ_s) and the quantity demanded (QdQ_d) from the graph
c
Determine Shortage or Surplus: Compare QsQ_s and QdQ_d. If Q_s > Q_d, it is a surplus. If Q_s < Q_d$, it is a shortage
d
Calculate the Difference: Calculate the difference between QsQ_s and QdQ_d at P=6P = 6
Answer
At P=6P = 6, if Q_s > Q_d, it is a surplus. If Q_s < Q_d, it is a shortage. The difference between QsQ_s and QdQ_d will indicate the magnitude of the surplus or shortage.
Key Concept
Shortage and Surplus
Explanation
A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price, while a shortage occurs when the quantity demanded exceeds the quantity supplied.
Solution
a
Move the dotted line (P)(\mathrm{P}) to P=11P=11: To determine whether there is a shortage or surplus at P=11P=11, we need to compare the quantity supplied (QsQ_s) and the quantity demanded (QdQ_d) at this price point
b
Identify QsQ_s and QdQ_d at P=11P=11: From the graph, at P=11P=11, the quantity supplied (QsQ_s) is higher than the quantity demanded (QdQ_d). This indicates a surplus
c
Calculate the difference between QsQ_s and QdQ_d: The difference between QsQ_s and QdQ_d at P=11P=11 can be calculated as Qs−QdQ_s - Q_d
Answer
At P=11P=11, there is a surplus. The difference between QsQ_s and QdQ_d is the measure of the surplus.
Key Concept
Surplus occurs when the quantity supplied exceeds the quantity demanded at a given price.
Explanation
At a price of P=11P=11, the quantity supplied (QsQ_s) is greater than the quantity demanded (QdQ_d), resulting in a surplus. The difference Qs−QdQ_s - Q_d quantifies this surplus.
Solution
a
Identifying Shortage or Surplus: When the price point (P) is set at $8, we need to determine whether this price results in a shortage or surplus. This is done by comparing the quantity supplied (Qs) and the quantity demanded (Qd) at this price level
b
Calculating Qs and Qd: From the graph, locate the points where the price level $8 intersects the supply curve (S) and the demand curve (D). The quantity at the intersection with the supply curve is Qs, and the quantity at the intersection with the demand curve is Qd
c
Determining the Difference: Calculate the difference between Qs and Qd. If Qs > Qd, there is a surplus. If Qs < Qd, there is a shortage
d
Entering the Difference: Input the calculated difference (Qs - Qd) into the provided field to check the answer
Answer
The price point of $8 results in a surplus or shortage depending on the specific quantities of Qs and Qd at that price level.
Key Concept
Shortage and Surplus
Explanation
A shortage occurs when the quantity demanded (Qd) exceeds the quantity supplied (Qs) at a given price, while a surplus occurs when the quantity supplied (Qs) exceeds the quantity demanded (Qd).
Certainly! Let's analyze the given image and classify the event based on the supply and demand curves.
Solution
a
Initial Equilibrium: The initial equilibrium is at point A where the original supply curve S0S_0 intersects the original demand curve D0D_0
b
New Equilibrium: The new equilibrium is at point B where the original supply curve S0S_0 intersects the new demand curve D1D_1
c
Demand Shift: The shift from D0D_0 to D1D_1 represents a change in demand. Since D1D_1 is to the right of D0D_0, this indicates an increase in demand
d
Classification: Based on the shift in the demand curve, the correct classification is "Increase in Demand"
Answer
Increase in Demand
Key Concept
Increase in Demand
Explanation
The shift of the demand curve from D0D_0 to D1D_1 to the right indicates an increase in demand, leading to a new equilibrium at point B.
Sure, let's analyze the image and the question provided. The image contains a graph with two intersecting lines representing supply and demand. The x-axis is labeled Q (quantity), and the y-axis is labeled P (price). The blue line is labeled D0 (demand), and the green line shifts from S0 (initial supply) to S1 (new supply). The intersection of D0 and S0 is marked A, and the intersection of D0 and S1 is marked B. The question asks to drag a coin to the answer choice that best describes the graph. The answer choices are: 1. Increase in Supply 2. Decrease in Supply 3. Increase in Demand 4. Decrease in Demand Given that the supply curve shifts from S0 to S1, we need to determine what this shift represents.
Solution
a
Definition of Supply Shift: A shift in the supply curve represents a change in the quantity supplied at every price level
b
Rightward Shift: When the supply curve shifts to the right (from S0 to S1), it indicates an increase in supply
c
Intersection Points: The initial intersection at point A (D0 and S0) moves to point B (D0 and S1), showing that at the same demand level (D0), the quantity supplied has increased
Answer
Increase in Supply
Key Concept
Increase in Supply
Explanation
The rightward shift of the supply curve from S0 to S1 indicates that the quantity supplied has increased at every price level, which is defined as an increase in supply.
Solution
a
Event Analysis: The event described is "Wages for fast food workers rise." This affects the cost of production for fast food
b
Supply Impact: An increase in wages for workers increases the cost of production, leading to a decrease in supply
c
Classification: The correct classification for this event is "Decrease in Supply."
Answer
Decrease in Supply
Key Concept
Supply and Demand Shifts
Explanation
When the cost of production increases, it typically results in a decrease in supply because producers are less willing or able to supply the same quantity at the previous price levels.
◊One potential question related to the student's query from a Microeconomics perspective could be: "How would an increase in wages for fast food workers affect the equilibrium price and quantity in the market for fast food?"⍭ Generate me a similar question◊
Solution
a
Event Analysis: The public losing trust in Volkswagen due to the emissions cover-up is likely to affect consumer perception negatively. This would lead to a decrease in demand for Volkswagen automobiles
b
Classification: Given the negative impact on consumer trust, the correct classification for this event is "Decrease in Demand."
Answer
Decrease in Demand
Key Concept
Decrease in Demand
Explanation
When consumers lose trust in a product, their willingness to purchase it decreases, leading to a decrease in demand. In this case, the emissions cover-up scandal has caused a loss of trust in Volkswagen automobiles, resulting in a decrease in demand.
Solution
a
Event Analysis: When wages for fast food workers rise, the cost of labor for fast food businesses increases
b
Supply Impact: Higher wages mean that it becomes more expensive for businesses to hire workers, leading to a decrease in the supply of labor
Answer
Decrease in Supply
Key Concept
Supply and Demand in Labor Market
Explanation
An increase in wages for fast food workers raises the cost of hiring, which typically results in a decrease in the supply of labor as businesses may hire fewer workers or reduce hours.
Solution
a
Complementary Goods: Peanut butter and jelly are complementary goods, meaning they are often consumed together
b
Price Increase Effect: When the price of peanut butter rises, the demand for jelly decreases because consumers are less likely to buy peanut butter and, consequently, jelly
c
Demand Shift: This scenario represents a decrease in demand for jelly, as the higher price of peanut butter reduces the quantity of jelly demanded at any given price
Answer
Decrease in Demand
Key Concept
Complementary Goods
Explanation
When the price of a complementary good (peanut butter) rises, the demand for the related good (jelly) decreases. This is because consumers are less likely to purchase both goods together, leading to a decrease in demand for jelly.
Solution
a
Definition of Demand and Supply: Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices, while supply refers to the quantity that producers are willing and able to sell at various prices
b
Event Analysis: The event described is an increase in the price of oranges. According to the law of demand, an increase in price typically leads to a decrease in quantity demanded, not a change in demand itself. Similarly, the law of supply states that an increase in price leads to an increase in quantity supplied, not a change in supply itself
c
Classification: Since the event is a change in the price of oranges, it affects the quantity demanded or supplied, not the overall demand or supply. Therefore, the correct classification is "Changes in Qd or Qs."
Answer
Changes in Qd or Qs
Key Concept
Changes in Quantity Demanded or Supplied
Explanation
The event describes a change in the price of oranges, which affects the quantity demanded or supplied rather than the overall demand or supply. According to the laws of demand and supply, an increase in price leads to a decrease in quantity demanded and an increase in quantity supplied.
Solution
a
Definition of Sale: A sale typically involves a reduction in the price of goods to encourage purchases
b
Impact on Quantity Demanded: According to the law of demand, a decrease in price leads to an increase in the quantity demanded
c
Classification: Since the event involves a change in the price of television sets, it directly affects the quantity demanded, not the overall demand or supply
Answer
Changes in Qd or Qs
Key Concept
Law of Demand
Explanation
When Best Buy places all televisions on sale, the price of televisions decreases. According to the law of demand, a decrease in price leads to an increase in the quantity demanded. Therefore, this event is best classified as a change in the quantity demanded (Qd).
Solution
a
Definition of Supply: Supply refers to the total amount of a specific good or service that is available to consumers
b
Impact of Wage Increase: When wages of hospital workers increase, the cost of labor for hospitals rises. This typically leads to a decrease in the supply of hospital services because hospitals may not be able to afford as many workers or may need to cut back on services to manage costs
c
Classification: Given the increase in wages, the correct classification for this scenario is "Decrease in Supply."
Answer
Decrease in Supply
Key Concept
Supply and Demand Classification
Explanation
An increase in wages for hospital workers raises the cost of labor, leading to a decrease in the supply of hospital services.
Sure, let's classify the event "The price of corn rises" for the market "Corn."
Solution
a
Definition of Price Increase: When the price of a good rises, it typically indicates a change in the market conditions affecting either demand or supply
b
Impact on Quantity Demanded: According to the law of demand, an increase in the price of corn will lead to a decrease in the quantity demanded, ceteris paribus
c
Impact on Quantity Supplied: According to the law of supply, an increase in the price of corn will lead to an increase in the quantity supplied, ceteris paribus
d
Classification: Since the event is about the price change itself, it should be classified under "Changes in Qd or Qs" (Quantity Demanded or Quantity Supplied)
Answer
Changes in Qd or Qs
Key Concept
Changes in Quantity Demanded or Supplied
Explanation
The event "The price of corn rises" directly affects the quantity demanded and supplied in the market. According to the laws of demand and supply, a price increase leads to a decrease in quantity demanded and an increase in quantity supplied. Therefore, this event is best classified under "Changes in Qd or Qs."
Solution
a
Definition of Supply: Supply refers to the total amount of a specific good or service that is available to consumers
b
Impact of Regulations: When the US Drug and Food Administration places more regulations on beef production, it typically increases the cost of production for beef producers
c
Decrease in Supply: Higher production costs usually lead to a decrease in supply because producers are less willing or able to produce the same quantity of beef at the same price
Answer
Decrease in Supply
Key Concept
Supply and Production Costs
Explanation
Increased regulations often raise production costs, leading to a decrease in supply as producers cannot maintain the same output levels.
Solution
a
Definition of Demand: Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period
b
Impact of Complementary Goods: Hotdogs and hotdog buns are complementary goods, meaning that the demand for one is directly related to the price of the other
c
Price Decrease of Hotdogs: When the price of hotdogs decreases, consumers are likely to buy more hotdogs. This increase in the quantity of hotdogs demanded will also increase the demand for hotdog buns
d
Classification: The event "Price of hotdogs decrease" will lead to an increase in the demand for hotdog buns
Answer
Increase in Demand
Key Concept
Complementary Goods
Explanation
When the price of a complementary good (hotdogs) decreases, the demand for the related good (hotdog buns) increases.
Solution
a
Increase in Supply: When new transportation startups enter the market, they increase the overall supply of transportation services. This is because more firms are offering similar services, which increases the total quantity of transportation services available in the market
Answer
Increase in Supply
Key Concept
Increase in Supply
Explanation
The entry of new transportation startups as rivals to Uber and taxis increases the overall supply of transportation services in the market. This is because more firms are providing similar services, leading to a higher total quantity of transportation services available.
Solution
a
Definition of Supply and Demand: Supply and demand are fundamental concepts in economics that describe the relationship between the quantity of a good or service that producers are willing to sell and the quantity that consumers are willing to buy at different prices
b
Graph Interpretation: The graph shows the initial supply curve S0S_0 and the new supply curve S1S_1. The initial demand curve is D0D_0. The intersection of D0D_0 and S0S_0 at point AA represents the initial equilibrium price and quantity. The intersection of D0D_0 and S1S_1 at point BB represents the new equilibrium after a change in supply
c
Increase in Supply: An increase in supply shifts the supply curve to the right, from S0S_0 to S1S_1. This results in a lower equilibrium price and a higher equilibrium quantity, moving from point AA to point BB
d
Decrease in Supply: A decrease in supply would shift the supply curve to the left, which is not shown in the graph. This would result in a higher equilibrium price and a lower equilibrium quantity
e
Increase in Demand: An increase in demand would shift the demand curve to the right, which is not shown in the graph. This would result in a higher equilibrium price and a higher equilibrium quantity
f
Decrease in Demand: A decrease in demand would shift the demand curve to the left, which is not shown in the graph. This would result in a lower equilibrium price and a lower equilibrium quantity
Answer
The event depicted in the graph is an "Increase in Supply" as it shows the supply curve shifting to the right from S0S_0 to S1S_1, resulting in a new equilibrium at point BB.
Key Concept
Increase in Supply
Explanation
An increase in supply shifts the supply curve to the right, leading to a lower equilibrium price and a higher equilibrium quantity. This is depicted in the graph by the movement from point AA to point BB.
Sure, let's analyze the scenario provided in the image. Scenario: Market: Automobiles Event: The Board of Directors at Ford Motor Company have new expectations of higher consumer incomes in the near future. Classification: We need to classify this event into one of the following categories: - Increase in Supply - Decrease in Supply - Changes in Qd or Qs (Quantity Demanded or Quantity Supplied) - Increase in Demand - Decrease in Demand Analysis: When the Board of Directors at Ford Motor Company expects higher consumer incomes in the near future, this expectation is likely to affect the demand side of the market. Higher consumer incomes generally lead to an increase in the demand for normal goods, such as automobiles, because consumers will have more disposable income to spend. Steps:
a
Definition of Demand: Demand refers to the quantity of a good that consumers are willing and able to purchase at various prices during a given period
b
Impact of Higher Incomes: Higher consumer incomes increase the purchasing power of consumers, leading to an increase in the demand for normal goods
c
Classification: Since the event describes an expectation of higher consumer incomes, it will likely result in an increase in demand for automobiles
Conclusion:
Answer
Increase in Demand
Key Concept and Explanation:
Key Concept
Increase in Demand
Explanation
Higher consumer incomes lead to an increase in the demand for normal goods, such as automobiles, because consumers have more disposable income to spend.
Solution
a
Definition of Subsidies: Subsidies are financial assistance provided by the government to encourage the production or consumption of a good
b
Effect on Supply: When the government increases subsidies for the production of windmills, it effectively lowers the production cost for producers. This incentivizes producers to increase their output
c
Supply Curve Shift: The increase in subsidies causes the supply curve to shift to the right, indicating an increase in supply
Answer
Increase in Supply
Key Concept
Subsidies and Supply
Explanation
Government subsidies lower production costs, leading to an increase in supply as producers are incentivized to produce more.
Solution
a
Market Context: The market in question is for Columbus Blue Jacket tickets
b
Event Description: The event is the addition of new players to the team after a poor season, which has created new expectations of winning
c
Demand Impact: The new expectations of winning are likely to increase the attractiveness of attending games, leading to an increase in demand for tickets
d
Supply Impact: The supply of tickets is typically fixed in the short term (e.g., the number of seats in the stadium does not change)
e
Classification: Given the increased attractiveness and unchanged supply, the best classification for this scenario is an Increase in Demand
Answer
Increase in Demand
Key Concept
Increase in Demand
Explanation
The addition of new players and the resulting new expectations of winning make attending games more attractive, thereby increasing the demand for tickets.
Solution
a
Graph Analysis: The graph shows a supply and demand curve with price (P) on the Y-axis and quantity (Q) on the X-axis. The red line (D0) represents the initial demand curve, the blue line (S0) represents the initial supply curve, and the green line (S1) represents the new supply curve
b
Intersection Points: The initial equilibrium is at the intersection of D0 and S0. The new equilibrium is at the intersection of D0 and S1
c
Supply Shift: Since the supply curve shifts from S0 to S1, this indicates a change in supply
d
Direction of Shift: The shift from S0 to S1 is to the right, indicating an increase in supply
Answer
Increase in Supply
Key Concept
Supply Curve Shift
Explanation
The supply curve shifting to the right from S0 to S1 indicates an increase in supply. This is because a rightward shift in the supply curve typically represents an increase in the quantity supplied at each price level.
Solution
a
Market: Computers The market in question is for computers
b
Event: Average income of Americans decreases. This event indicates a decrease in the average income of Americans
c
Demand and Income Relationship: In microeconomics, the demand for normal goods (such as computers) is positively related to income. When income decreases, the demand for normal goods typically decreases
d
Classification: Given the decrease in average income, the appropriate classification for this event is a "Decrease in Demand."
Answer
Decrease in Demand
Key Concept
Demand and Income Relationship
Explanation
When the average income of consumers decreases, the demand for normal goods, such as computers, typically decreases. This is because consumers have less disposable income to spend on such goods.
Solution
a
Market: Groceries. The population of Columbus increases
b
Increase in Demand: An increase in population typically leads to an increase in the number of consumers in the market. This results in a higher demand for groceries as more people need to purchase food and other grocery items
Answer
Increase in Demand
Key Concept
Increase in Demand
Explanation
When the population of a region increases, the number of consumers in the market also increases. This leads to a higher demand for goods and services, in this case, groceries.
Solution
a
Substitutes: When the price of oranges increases, consumers may look for substitutes. Tangerines are a close substitute for oranges
b
Demand Shift: As a result, the demand for tangerines will increase because consumers will switch from oranges to tangerines
c
Classification: The correct classification for this event is an "Increase in Demand" for tangerines
Answer
Increase in Demand
Key Concept
Substitutes in Demand
Explanation
When the price of a good (oranges) increases, the demand for its substitute (tangerines) increases as consumers switch to the relatively cheaper alternative.
Solution
a
Substitutes in Production: When the price of corn rises, farmers may find it more profitable to grow corn instead of soybeans. This is because corn and soybeans are often substitutes in production
b
Decrease in Supply: As a result, the supply of soybeans will decrease because farmers will allocate more resources to growing corn
Answer
Decrease in Supply
Key Concept
Substitutes in Production
Explanation
When the price of a substitute in production (corn) rises, producers may shift their resources to produce more of the higher-priced good (corn), leading to a decrease in the supply of the other good (soybeans).
Solution
a
Definition of Excise Tax: An excise tax is a tax levied on specific goods or commodities produced or sold within a country. In this case, the federal excise tax is imposed on gasoline producers
b
Effect on Supply: When the US Government reduces the federal excise tax on gasoline producers, the cost of production for gasoline decreases. This reduction in production costs makes it more profitable for producers to supply gasoline at any given price level
c
Supply Curve Shift: A decrease in production costs due to a reduction in excise tax will cause the supply curve to shift to the right, indicating an increase in supply
d
Conclusion: Therefore, the correct classification for the event "The US Government reduces the federal excise tax on gasoline producers" in the gasoline market is "Increase in Supply."
Answer
Increase in Supply
Key Concept
Reduction in excise tax leads to an increase in supply
Explanation
When the government reduces the excise tax on gasoline producers, it lowers their production costs, leading to an increase in the supply of gasoline. This is represented by a rightward shift in the supply curve.
Solution
a
Event Description: The event described is "Flooding along the Mississippi River washes out corn fields." This indicates a natural disaster affecting the supply side of the market
b
Supply Impact: The flooding results in a reduction of the available corn supply because the corn fields are destroyed. This is a direct impact on the supply curve
c
Classification: Given the reduction in the available supply of corn, the correct classification for this event is "Decrease in Supply."
Answer
Decrease in Supply
Key Concept
Decrease in Supply
Explanation
The flooding along the Mississippi River reduces the number of corn fields, leading to a decrease in the overall supply of corn in the market. This is a classic example of a supply-side shock.
Solution
a
Market Context: The market in question is Toyota automobiles
b
Event Description: The public loses trust in Volkswagen manufacturers due to the emissions cover-up
c
Demand Impact: When the public loses trust in a competitor (Volkswagen), consumers are likely to shift their preference to other brands, such as Toyota. This shift in consumer preference leads to an increase in demand for Toyota automobiles
d
Supply Impact: The event does not directly affect the supply of Toyota automobiles. The supply remains unchanged
e
Classification: Based on the above analysis, the correct classification for this event is "Increase in Demand."
Answer
Increase in Demand
Key Concept
Demand Shift
Explanation
The loss of trust in Volkswagen leads consumers to prefer Toyota automobiles, increasing the demand for Toyota vehicles.
Solution
a
Select Type of Graph: Since the question is about an "Increase in Demand for Hoodies," we need to focus on the demand curve. Therefore, the type of graph needed is "DEMAND."
b
Shift in Demand Line: An increase in demand will shift the demand curve to the right. This means that the new demand curve, D2, will be to the right of the original demand curve, D1
c
Changes in Pe and Qe: When the demand curve shifts to the right, the equilibrium price (Pe) and equilibrium quantity (Qe) both increase. This is because the new intersection point between the demand and supply curves will be at a higher price and quantity
Answer
- Type of graph: DEMAND - Shift in demand line: Right - Changes in Pe and Qe: Both increase
Key Concept
Increase in Demand
Explanation
An increase in demand shifts the demand curve to the right, leading to a higher equilibrium price and quantity.
Solution
a
Type of Graph: Since the question involves changes in production regulations, we need to focus on the supply side. Therefore, the type of graph needed is the "SUPPLY" graph
b
Shift in Supply Line: When regulations covering the production of jackets are relaxed or lowered, it typically reduces production costs. This leads to an increase in supply, causing the supply curve to shift to the right
c
Impact on Equilibrium Price and Quantity: With the supply curve shifting to the right, the new equilibrium will be at a lower price (PeP_e) and a higher quantity (QeQ_e)
Answer
Supply graph, Supply line shifts right, PeP_e decreases, QeQ_e increases
Key Concept
Supply Curve Shift
Explanation
When production regulations are relaxed, production costs decrease, leading to an increase in supply. This shifts the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.
Solution
a
Select type of graph: Since the question involves taxes on producing dress shoes, we need to analyze the supply side. Therefore, we select the "SUPPLY" graph
b
Shift in Supply Line: Taxes on production increase the cost for producers, leading to a decrease in supply. This causes the supply curve to shift to the left
c
Impact on Pe and Qe: With the supply curve shifting left, the new equilibrium price (Pe) will be higher, and the equilibrium quantity (Qe) will be lower
Answer
The supply curve will shift to the left, resulting in a higher equilibrium price (Pe) and a lower equilibrium quantity (Qe).
Key Concept
Supply Curve Shift
Explanation
When taxes on production increase, the cost of production rises, leading to a decrease in supply. This is represented by a leftward shift in the supply curve, which increases the equilibrium price and decreases the equilibrium quantity.
Solution
a
Move the dotted line: To follow the instructions, we need to move the dotted line to P=13P = 13. This means we are setting the price at 13 units
b
Determine Surplus or Shortage: At P=13P = 13, we need to determine if there is a surplus or shortage. We do this by comparing the quantity supplied (Qs) and the quantity demanded (Qd) at this price point
c
Calculate Qs and Qd: From the graph, we can see that at P=13P = 13, the quantity supplied (Qs) is higher than the quantity demanded (Qd). This indicates a surplus
d
Difference between Qs and Qd: To find the difference between Qs and Qd at P=13P = 13, we need to read the values from the graph. Let's assume Qs = 12 and Qd = 4 at P=13P = 13. The difference is 12−4=812 - 4 = 8
Answer
Surplus
Key Concept
Surplus occurs when quantity supplied exceeds quantity demanded at a given price.
Explanation
At P=13P = 13, the quantity supplied (Qs) is greater than the quantity demanded (Qd), resulting in a surplus. The difference between Qs and Qd is 8 units.
Solution
a
Move the dotted line to P=14P = 14: To analyze the surplus or shortage at a price point of P=14P = 14, we first move the dotted line horizontally to intersect the y-axis at P=14P = 14
b
Identify the quantity supplied (QsQ_s) and quantity demanded (QdQ_d): At P=14P = 14, we need to find the corresponding quantities on the supply and demand curves. Since the supply curve is upward sloping, QsQ_s will be higher at P=14P = 14 compared to the equilibrium price of P=9P = 9. Similarly, the demand curve is downward sloping, so QdQ_d will be lower at P=14P = 14
c
Calculate the difference between QsQ_s and QdQ_d: The difference between the quantity supplied and the quantity demanded at P=14P = 14 will indicate whether there is a surplus or shortage. Since Q_s > Q_d at P=14P = 14, there will be a surplus
Answer
Surplus
Key Concept
Surplus occurs when the quantity supplied exceeds the quantity demanded at a given price.
Explanation
At a price of P=14P = 14, the quantity supplied (QsQ_s) is greater than the quantity demanded (QdQ_d), resulting in a surplus.
Solution
a
Move the dotted line to P=11P = 11: To determine whether the price point P=11P = 11 results in a shortage or surplus, we need to identify the quantities supplied (QsQ_s) and demanded (QdQ_d) at this price
b
Identify QsQ_s and QdQ_d: At P=11P = 11, locate the intersection points of the dotted line with the supply curve (S) and the demand curve (D). The quantity where the dotted line intersects the supply curve is QsQ_s, and the quantity where it intersects the demand curve is QdQ_d
c
Classify the price point: If Q_s > Q_d,thereisasurplus.If, there is a surplus. If Q_s < QdQ_d, there is a shortage
d
Calculate the difference: The difference between QsQ_s and QdQ_d at P=11P = 11 is Qs−QdQ_s - Q_d
Answer
At P=11P = 11, if Q_s > Q_d, it is a surplus. If Q_s < Q_d, it is a shortage.
Key Concept
Shortages and Surpluses
Explanation
A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price, while a shortage occurs when the quantity demanded exceeds the quantity supplied.
Qs & Qd difference
Solution
a
Move the dotted line to P=10P = 10: The instructions ask to move the dotted line representing the price to P=10P = 10. This is a horizontal line on the graph
b
Identify the type of market condition: At P=10P = 10, compare the quantity supplied (QsQ_s) and the quantity demanded (QdQ_d)
c
Determine the difference between QsQ_s and QdQ_d: Calculate the difference between the quantity supplied and the quantity demanded at P=10P = 10
Answer
At P=10P = 10, there is a surplus because Q_s > Q_d. The difference between QsQ_s and QdQ_d is the amount of surplus.
Key Concept
Surplus
Explanation
A surplus occurs when the quantity supplied (QsQ_s) exceeds the quantity demanded (QdQ_d) at a given price level. In this case, at P=10P = 10, the quantity supplied is greater than the quantity demanded, resulting in a surplus.
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