Economics Short Problems (Answer in one or two lines each)

1. Complete the table below. It contains the quantity demanded and quantity supplied of pizzas per day in Richmond. The equilibrium price is $10 and the equilibrium quantity is 500. Your task is to put values in the last two columns that are consistent with the laws of demand and supply and determine that the equilibrium price and quantity are $10 and 500.

2.              Plot the demand and supply curves using the table you completed above.Be sure to label the axis. Use S to denote the supply curve and D to denote the demand curve.

3.              Explain why $5 isn’t an equilibrium price.

The explanation should state why price tends to change and in what direction.

4.              Identify a substitute for pizza. _________ is a substitute for pizza.

5.              

a.              Use your graph to show how an increase in the price of the substitute would affect the market for pizza.  

            Use S’ and D’ to denote any new supply or demand curves.

6.              What happens to the equilibrium price?

a.              Price increases

b.              Price decreases

c.              Price remains constant

d.              The effect on price is indeterminate; price may rise, fall, or remain the same.

7.              What happens to the equilibrium quantity?

 .               Quantity increases

a.              Quantity decreases

b.              Quantity remains constant

c.              The effect on quantity is indeterminate; quantity may rise, fall, or remain the same.

8.              Plot the demand and supply curves using the table you completed above.Be sure to label the axis. Use S to denote the supply curve and D to denote the demand curve.

9.              Identify a complement for pizza. _________ is a complement for pizza.

10.                          Use your graph to show how an increase in the price of the complement would affect the market for pizza.  

Use S’ and D’ to denote any new supply or demand curves.

11.           What happens to the equilibrium price?

a.              Price increases

b.              Price decreases

c.              Price remains constant

d.              The effect on price is indeterminate; price may rise, fall, or remain the same.

12.           What happens to the equilibrium quantity?

 .               Quantity increases

a.              Quantity decreases

b.              Quantity remains constant

c.              The effect on quantity is indeterminate; quantity may rise, fall, or remain the same.

13.           Plot the demand and supply curves using the table you completed above.Be sure to label the axis. Use S to denote the supply curve and D to denote the demand curve.

14.           Use your graph to show how an increase in income would affect the market for pizza if pizza is a normal good. Use S’ and D’ to denote any new supply or demand curves.

15.           What happens to the equilibrium price?

a.              Price increases

b.              Price decreases

c.              Price remains constant

d.              The effect on price is indeterminate; price may rise, fall, or remain the same.

16.           What happens to the equilibrium quantity?

 .               Quantity increases

a.              Quantity decreases

b.              Quantity remains constant

c.              The effect on quantity is indeterminate; quantity may rise, fall, or remain the same.

17.           Plot the demand and supply curves using the table you completed above.Be sure to label the axis. Use S to denote the supply curve and D to denote the demand curve.

18.           Use your graph to show how an increase in the price of cheese, an ingredient used to make pizza, would affect the market for pizza.  

Use S’ and D’ to denote any new supply or demand curves.

19.           What happens to the equilibrium price?

a.              Price increases

b.              Price decreases

c.              Price remains constant

d.              The effect on price is indeterminate; price may rise, fall, or remain the same.

20.           What happens to the equilibrium quantity?

 .               Quantity increases

a.              Quantity decreases

b.              Quantity remains constant

c.              The effect on quantity is indeterminate; quantity may rise, fall, or remain the same.

21.           Would the shortage persist in the market system? Why or why not?