eco2023
Q1.
Dr. Dhakal
1
A decrease in the supply of sports drinks
A drop in the average household income in the United States from $56K to $52K
An improvement in the bottling technology for premium bottled water
An increase in the prices of electrolytes used in premium bottled water
Following graphs represent market for premium bottled water. Match the graphs with each of the following scenarios.
Refer to the following graph.
What is the equilibrium price and quantity?
Will there be a shortage or surplus if the price was $6? Why? How much is the shortage or surplus?
Dr. Dhakal
2
Supply
Demand
Quantity (millions of lbs)
Price ($/lb)
33
4
6
10
55
Q2.
Q3.
In December, the price of Christmas trees rises and the quantity of trees sold rises. Is this a violation of the law of demand? Why? Why not?
The demand for plums is highest during summer and lowest during winter. Yet plums prices are normally lower in summer than in winter. What must be happening to the supply of plums, from winter to summer, for the equilibrium price to fall?
Q4.
1 Suppose that you are are trying to sell your 2015 Toyota Prius. At the last minute, the hybrid battery dies. You can pay $1000 to have it repaired, or sell the car "as-is." If you sell you car "as-is", you will get $9700 for the car but if you fix it, you will receive $$10800. Should you fix the car before selling? What if you will receive $10200 for the car after its fixed? Explain using the concepts of marginal benefit (MB) and marginal cost (MC.)
2 Based on your understanding of supply and demand curves from chapter 3, what do you think will likely happen to the price of gas and oil as the cases of coronavirus start to go down? Why?