The following are common errors students make when discussing supply and demand. What is the mistake in each?
a. At equilibrium, demand equals supply.
b. The quantity of demand is greater than the quantity of supply.
c. They move along the line from both ends to an equilibrium in the middle.
d. The increase in demand causes an increase in supply.
a. Demand never equals supply because the entire demand curve never equals the entire supply curve. At the equilibrium price, quantity demanded equals quantity supplied.
b. Quantity of demand is a meaningless term in economics. The proper term is "quantity demanded."
c. This phrase is apparently an attempt to graphically describe supply and demand. However, it is difficult to understand and does not describe the process whereby a market reaches an equilibrium.
d. An increase in demand would lead to an increase in quantity supplied, but not an increase in supply. There would be a movement along the supply curve to a new quantity supplied at a higher price. Generally only one curve, either supply or demand, will shift at one time, causing equilibrium to move along the other curve.
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Which of the following factors was NOT responsible for the decline in farmers as a percent of the U.S. population from after the Civil War to 1900?
A. Falling prices for corn, wheat, and cotton B. The demand for food outstripped supply C. New technology D. The government's liberal land policy that increased output
In order to minimize the net cost of pollution reduction, the level of pollution reduction (the amount of a pollutant not released into the environment) should be the level at which
A. the total cost of reducing pollution is minimized and the total benefits of reducing pollution are maximized. B. the marginal benefit of reducing pollution equals the marginal cost of reducing pollution. C. the total benefit of reducing pollution equals the total cost of reducing pollution. D. the marginal benefit of reducing pollution exceeds the marginal cost of reducing pollution by the greatest possible amount.
Marginal utility is calculated as
A) total utility/number of units consumed. B) change in total utility/number of units consumed. C) change in total utility/change in number of units consumed. D) total utility/change in number of units consumed.
Economists use a preference map to illustrate that
A) more is better than less. B) preferences are transitive. C) preferences are complete. D) All of the above.