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

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c. Shortage; price will rise. D. Shortage; price will certainly fall. E. Nothing due to the fact that the sector is in equilibrium.
2. I beg your pardon of the following can command to boost in the it is provided for great X? a. A decrease in the number of sellers of an excellent X. B. Boost in the price that inputs provided to make great X. C. An increase in consumers" income, assuming good X is a normal. d. An advancement in an innovation used in production of good X.
e. None of the above
3. Rise in the price of power will: a. Increase the demand for kerosene heaters.
b. Increase the need for light bulbs. C. Increase the demand for stereos. D. Boost the demand for TVs.
4. I beg your pardon of the following events will cause rise in the market need for Guinness (a brand of beer)? a. A diminish in the price the Guinness. B. Boost in the price the Heineken (another brand that beer).
c. An increase in the price the Planters peanuts (a security good). D. Boost in income, if Guinness is an inferior good. E. No one of the above will cause rise 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 quantity supplied amounts to quantity demanded. From the table we can see that at $1.60, Qs = Qd = 2,400. Thus $1.60 is the equilibrium price.

b. If the organizers that the sporting event decide to set the price at 1.80, how many hot dogs will be sold? in ~ $1.80, 4,800 hot dogs will be available for sale, but only 1,600 will certainly be demanded. Therefore, only 1,600 warm dogs will certainly be sold.


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

False. The expression "normal good" way that once a person"s revenue increases, the usage of that an excellent also increases.


3. A. State the legislation of Demand.

As the price that a an excellent rises, all various other things gift equal, the quantity demanded of that good falls.

b. Over the last 2 decades, tuition fees at Purdue University have actually increased by 50%. At the very same time, the variety of students enrolled has actually increased from 22,000 to over 35,000. Go this example demonstrate that the law of demand is false? explain why or why not. Use graphs.


No, this reality does not refute the legislation of Demand. The regulation of need tells us what will happen to quantity demanded if price is the only factor that changes. In the example provided, plenty of things have actually probably adjusted over twenty years, average family members income and the call of the institution being just two that them. As a result, the need for the services detailed by that university has actually shifted. Watch graph.

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4. The total demand because that wheat and the total supply that wheat per month in the Kansas City grain market are together follows:


Thousands that bushels inquiry
Price per bushel, $
Thousands the 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. Industry equilibrium wake up at the point where industry clears, the is, wherein quantity gave is same to amount demanded. In other words, equilibrium price is the price at which over there exists neither surplus nor shortage. Looking at the entries in the last tower (in bold), we have the right to see the equilibrium price is $4. Therefore, the equilibrium amount 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 the wheat. The price will certainly not remain at the level due to the fact that it will certainly be in the sellers" best interest to raise their prices. In ~ $4.90, sellers will certainly supply 21,000 bushels an ext than buyers would certainly demand, thus developing a surplus. In bespeak to eliminate the surplus, sellers would need to decrease their price.

d. The declare is false. A surplus means that at a offered price, quantity gave is higher than amount demanded. Trying to remove the surplus, sellers will decrease your prices. Therefore, excess drive price down, not up. Shortages, ~ above the other hand, provide sellers the chance to raise prices, therefore "shortages journey prices up".

e. A ceiling in ~ $3.70 established by the government (which most likely tries to protect against the price from gift what that perceives together "too high") would certainly not allow the price to move towards the equilibrium. As a result, a irreversible shortage the wheat will emerge. Buyers will demand 7000 an ext bushels of wheat 보다 there is available.