1. A neighborhood grocery keep orders 200 cases of Pepsi every week and sells them in ~ a price of $6.00 per case. In ~ the finish of the an initial week, they have only marketed 160 cases. What economic instance is the grocery save facing and what will have to take place to price in order for equilibrium to it is in attained? a. Surplus; price will rise. B. Surplus; price will certainly fall.

You are watching: In which of the following situations would the price of a good be most likely to increase?

c. Shortage; price will certainly rise. D. Shortage; price will fall. E. Nothing since the market is in equilibrium.
2. I beg your pardon of the complying with can lead to rise in the supply for an excellent X? a. A to decrease in the variety of sellers of an excellent X. B. An increase in the price the inputs used to make great X. C. Rise in consumers" income, assuming great X is a normal. d. An innovation in modern technology used in manufacturing of good X.
e. None of the above
3. An increase in the price of electrical power will: a. Rise the need for kerosene heaters.
b. Boost the demand for irradiate bulbs. C. Rise the need for stereos. D. Rise the need for TVs.
4. Which of the following occasions will cause an increase in the market demand for Guinness (a brand the beer)? a. A decrease in the price that Guinness. B. Rise in the price the Heineken (another brand of beer).
c. Rise in the price the Planters peanuts (a safety good). D. Rise in income, if Guinness is an worse good. E. Nobody of the over will cause an increase in demand.

a. What is the equilibrium price of hot dogs? What provides you think so? according to the definition, the equilibrium price is the price in ~ which amount supplied amounts to quantity demanded. Native the table we have the right to see the at $1.60, Qs = Qd = 2,400. As such $1.60 is the equilibrium price.

b. If the organizers of the sporting occasion decide to collection the price in ~ 1.80, how numerous hot dogs will be sold? at $1.80, 4,800 warm dogs will certainly be readily available for sale, but only 1,600 will be demanded. Therefore, only 1,600 warm dogs will be sold.


2. True or False? Explain. In economics, "normal good" is the name for a an excellent a common individual deserve to afford.

False. The expression "normal good" means that as soon as a person"s earnings increases, the usage of that an excellent also increases.


3. A. State the regulation of Demand.

As the price of a good rises, all various other things being equal, the amount demanded of that good falls.

b. End the last two decades, tuition fees at Purdue University have actually increased by 50%. In ~ the same time, the number of students enrolled has actually increased indigenous 22,000 to end 35,000. Go this example show that the law of demand is false? describe why or why not. Usage graphs.


No, this truth does not refute the law of Demand. The regulation of demand tells united state what will happen to quantity demanded if price is the only element that changes. In the example provided, plenty of things have probably readjusted over twenty years, average household income and the call of the institution being simply two the them. As a result, the demand for the services noted by that university has actually shifted. Check out graph.

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4. The total demand because that wheat and also the total supply of wheat per month in the Kansas City grain industry are as follows:


Thousands that bushels inquiry
Price every bushel, $
Thousands that bushels supplied
Surplus (+) or shortage (--)
85
3.40
72
- 13
80
3.70
73
- 7
75
4.00
75
0
70
4.30
77
+ 7
65
4.60
79
+ 14
60
4.90
81
+ 21

a. Market equilibrium occurs at the suggest where sector clears, that is, where quantity supplied is equal to amount demanded. In other words, equilibrium price is the price at which over there exists neither surplus nor shortage. Looking in ~ the entries in the last shaft (in bold), we have the right to see the equilibrium price is $4. Therefore, the equilibrium quantity is 75,000 bushels.

b. For your individual work.

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c. At $3.40, there would certainly be a 13,000 bushels shortage of wheat. The price will certainly not continue to be at that level because it will be in the sellers" ideal interest come raise their prices. In ~ $4.90, sellers will supply 21,000 bushels much more than buyers would certainly demand, thus developing a surplus. In stimulate to remove the surplus, sellers would need to decrease your price.

d. The declare is false. A surplus way that at a given price, quantity supplied is greater than quantity demanded. Do the efforts to remove the surplus, sellers will certainly decrease their prices. Therefore, surpluses drive prices down, no up. Shortages, on the various other hand, give sellers the possibility to progressive prices, therefore "shortages drive prices up".

e. A ceiling in ~ $3.70 created by the government (which probably tries to protect against the price from being what the perceives as "too high") would certainly not enable the price to relocate towards the equilibrium. Together a result, a permanent shortage that wheat will emerge. Buyers will need 7000 much more bushels of wheat 보다 there is available.