Refer to Scenario 14.4. Suppose that the price of the product rises to $5, the number of workers hired
A) will decrease.
B) will increase.
C) will not change.
D) cannot be determined without knowing the wage rate.
B
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Suppose the demand curve for a good is given by the equation Q = 100 - P and the supply curve is given by the equation Q = 0.25P, where P represents the price of the good (measured in dollars per unit) and Q represents the quantity of the good (measured in units per week).
(i) Find the equilibrium price and quantity for this market. (ii) Suppose quantity demanded for the good rises by 10 units at every possible price while at the same time quantity supplied falls by 5 units at every possible price (with the exception that quantity supplied can not drop below zero units at any price). Find the new equilibrium price and quantity in this market. (iii) Given the change in demand, how large would the fall in supply need to be (given the same 10 unit rise in demand) in order for the price to decrease instead of increasing as in part (ii)?
Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P) and each consumer has the same demand. Big Waves has a constant marginal cost of $5 per consumer. If Big Waves charges the profit-maximizing single entry price to each consumer and offers the profit-maximizing number of entries, what is Big Waves profit per consumer?
A) $250 B) $200 C) $100 D) $300
If a permanent drop in demand causes a monopolist to earn below-normal profits in the long run, this monopolist
a. will always exit the market in the long run b. will be forced by the government to continue operating in the long run c. may continue operating in order to avoid alienating its customers d. will exit the market in the long run only if it cannot cover its fixed costs e. will use limit pricing to reduce the size of its loss
Which of the following policies would be most effective in the flat part of the SRAS demand curve?
a. The Fed decreases the money supply by 3 percent. b. The Fed decreases the money supply by 10 percent. c. The Fed increases the money supply by 3 percent. d. The Fed increases the money supply by 10 percent.