Course Work

Topics: Supply and demand, Economic equilibrium, Partial equilibrium Pages: 3 (342 words) Published: March 3, 2012
1How will the market supply curve of a good shift (i.e left ,right or no shift) in each of the following cases? (a) Costs of producing the good fall.................................................... left /right / no shift

(b) Alternative products (in supply) become more profitable........... left /right / no shift

(c) The price of the good rises .......................................................... left /right / no shift

(d) Firms anticipate that the price of the good is about to fall.......... left /right / no shift

2 How will the following changes affect the market price of wheat flour (assuming that the market is initially in equilibrium )? In each case, sketch what happens to the demand and /or supply curves and, as result, what happens to the equilibrium price. (a) People consume more bread

Price S1

P1

D1Quantity
Q1
(b) The discovery of a new cheaper way of milling flour
Price
S1

P1

D1Quantity
Q1
(c) The prices of other grains rise
Price
S1

P1

D1Quantity
Q1

(d)Rise and potatoes fall in price
Price
S1

P1

D1Quantity
Q1

3 The effect of an increase in demand on equilibrium price and quantity, when supply remains unchanged is to A) Increase both equilibrium price and quantity
B) Increase both equilibrium price only
C) Increase equilibrium quantity only
D) Decrease equilibrium price
E) Decrease equilibrium quantity
4 the effect of both an increase in demand and a decrease in supply on market equilibrium is to A) Decrease equilibrium price
B) Increase equilibrium price
C) Decrease equilibrium price and decrease equilibrium quantity D) Leave the equilibrium price and equilibrium quantity...
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