Term
| The supply of woots us given by Qs=2P. The demand for woots is given by Qd=40-2P. What will be the equilibrium price and quantity of woots? |
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Definition
P=10, Q=20
. At equilibrium the quantity supplied is equal to the quantity demanded: Qs = Qd. We are given an equation for supply and an equation for demand. If we insert the supply equation and the demand equation into the equilibrium equation, we have 2P = 40 – 2P. If we then add 2P to both sides of the equation, we have 4P = 40. Then, by dividing both sides of the equation by 4, we have P = 10. If we substitute this value for P into the supply equation, we have Qs = 2(10) = 20. If we substitute the same value for P into the demand equation, we have Qd = 40 – 2(10) = 40 – 20 = 20. Since we get the same value for the quantity supplied and the quantity demanded, this verifies that we have indeed found the equilibrium quantity. |
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Term
| The elasticity of DEMAND for zoozoos is 0.5. Due to a gov't price control, the price of zoozoos increases by 20%. What will happen to the quantity demanded? |
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Definition
Quantity demanded will decrease by 10%
The elasticity of demand is the percentage change in quantity demanded, divided by the percentage change in price: e = %ΔQd/%ΔP. In this question, we are given that e = 0.5, and %ΔP = 20. If we substitute these values into the elasticity equation, we have 0.5 = %ΔQd/20. By multiplying both sides of this equation by 20, we find that the quantity demanded changes by 10%. |
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Term
| Which of the following would shift the SUPPLY curve for tomatoes? |
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Definition
A decrease in the price of fertilizer, which is an input in tomatoe production.
Choice (b) is the only one that involves a shift in the supply curve. Choices (a), (c), and (d) all refer to things that would shift the demand curve. |
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Term
| With tariffs, import quotas and VERS(Voluntaryu export restraints), each of these interferes w/ Int'l trade, and thus there are some diffs. If it is absolutely necessary to interefere w/ internationl trade, it may be wise to use a VER. Why? |
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Definition
| A VER may increase the profits of producers in the exporting country and thus they may be less likely to push their govt to retailiate. |
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