Module 2 Problem Set

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Module 2 Problem Sets

Principles of Economics
Name:
Date:

Question #1

Question #1: Equilibrium price is always determined by _____________________________________and __________________________________.
Answers:

Question #2

Question #2: Shortages are associated with price ________________; surpluses are associated with price __________________________________.
Answers:

Question #3

Question #3: If supply decreases and demand remains the same, equilibrium price will _________________, and equilibrium quantity will _________________________.
Answers:

Question #4

Question #4: Find the equilibrium price and quantity ( in units and dollars, respectfully).
Answers:

Question #5

Question #5: Draw in a new supply curve S1, showing a decrease in supply. What happens to equilibrium price and quantity?
Answer:

Question #6

Question #6: (a) Is $6 a price ceiling or price floor? (b) Is there a shortage or a surplus? (c) How much is in (in units of quantity)?
Answers:
a.
b.
c.

Question #7

Question #7: (a) Is $12 a price ceiling or price floor? (b) Is there a shortage or a surplus? ( c) How much (in units of quantity)?
Answers:
a.
b.
c.

Question #8

Question #8: (a). If the supply curve is S1, how much are equilibrium price and quantity? (b). If the supply changes from S1 to S2, does the represent an increase or decrease in supply? ( c). How much are the new equilibrium price and quantity?
Answers:
a.
b.
c.

Question #9

Question #9: A major technological improvement leads to a large decrease in the cost of production. Draw a new supply curve S2, to reflect this change. Then state the new equilibrium price and quantity.
Answer:

Question #10

Question #10: (a) Draw a new demand curve, D2, which illustrates a decrease in demand. (b). State what happens to equilibrium price and quantity.
Answers:
a.
b.

Question #11

Question #11: Show an increase in demand and a decrease in supply. (a) Label each of the curves (S1, S2, D1 and D2). (b). State the original equilibrium price and quantity. ( c) State the new equilibrium price and quantity.
Answers:
a.
b.
c.

Question #12

Question #12: The entire orange crop in Florida is affected by a freeze. On the graph show how demand and supply are affected and show the new equilibrium price and quantity for a bushel of oranges.
Answer:

Question #13

Question #13: As price rises, quantity supply will _________________________ accroding to the Law of Demand.
Answer:

Question #14

Question #14: An increase in supply is show graphically by a shift of the supply curve to the _________________________.
Answer: