In the market for bicycles, explain what happens to the supply and demand curves when there is an increase in the price of steel used to make bikes
What will be an ideal response?
An increase in the price of steel is an increase in the price of a resource used to make the good. As a result, the supply of bicycles decreases and the supply curve shifts leftward. There is no change to the demand, so the demand curve does not shift. The equilibrium price of a bicycle rises and the equilibrium quantity decreases.
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The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, the deadweight loss equals
A) C + E. B) A + B + C. C) C. D) zero.
Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The new general equilibrium price of cereal is:
A. $9.66. B. $9.76. C. $7.76. D. $11.76.
The market demand curve for a product:
A. is the demand of an individual consumer. B. will lie to the right of all of the individual demand curves for a product. C. graphically is the vertical sum of the individual demand curves. D. will lie below all of the individual demand curves for a product.
Components of economic growth are:
a. physical capital, human capital, and technology. b. physical capital, human capital, and savings. c. education, physical capital, and technology. d. physical capital, working capital, and technology.