Ch 3 Insert C - Quia
Chapter 03 Demand, Supply, and Market Equilibrium
Problems
1. Answers: (a) Row 1: 4; Row 2: 2; Row 3: 12; Row 4:4; Row 5: 36. (b) Dex, Tex. (c)
Tex. (d) Left, Right. (e) “A change in demand.”
2. Answers: (a) 15 balls at $3; 10 balls at $2, 5 balls at $1; (b) Draw in supply curve S2 using the data in column 3; (c) -11 balls at $3; -8 balls at $2; -5 balls at $1; (d) decrease in supply.
3. Answers:
(a) Equilibrium price = $4.00. There is neither a shortage nor a surplus at $4.00. Quantity demanded and quantity supplied are equal to each other when price is $4.00.
(b)
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(c) At $3.40, there is a shortage of 13 units (i.e., -13). At $4.90, there is a surplus of 21 units (i.e. +21). If the price increases by 60 cents from the equilibrium price, a surplus of 14 units (+14) results. If the price falls by 30 cents from the equilibrium price, a shortage of 7 units (-7) results.
4. Answers:
(a) Price up; quantity down;
(b) Price down; quantity down;
(c) Price down; quantity up;
(d) Price indeterminate; quantity up;
(e) Price up; quantity up;
(f) Price down; quantity indeterminate;
(g) Price up, quantity indeterminate;
(h) Price indeterminate and quantity down.
5. Answer: The supply curve of the public colleges shifts to the right, reducing tuition and increasing enrollments. Enrollment demand curve of private colleges shifts to the left because of substitution away from private colleges. (See Figure 3.7c for the effect on public colleges, Figure 3.7b for the impact on private colleges.)
6. Answer: equilibrium price is P = 6; equilibrium quantity is Q = 20
7. Answers: (a) 12,500 apartments at a rent of $2000 per month; (b) A shortage of 5,000 apartments per month, 10,000 apartments will actually be rented each month; (c) A surplus of 5,000 apartments per month, 10,000 apartments will actually be rented each month; (d) 2,500 more apartments, 5000 more apartments; 7,500 more apartments.
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