3-1 Competitive Markets True or False (Why): In a competitive market, buyers and sellers have significant market power. 3-2 Demand What is the difference between an individual demand curve and a market demand curve? If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash? If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if incomes increase? What would be the effects of each of the following on the demand for hamburger in Hilo, Hawaii? In each case, identify the responsible determinant of demand. a) The price of chicken falls. b) The price of hamburger buns doubles. c) Scientists find that eating hamburger prolongs life. d) The population of Hilo doubles. 3-3 Supply What is the reason that a supply curve is positively sloped? If the price of corn rose, a) What would be the effect on the supply of corn? b) What would be the effect on the supply of wheat? The following table shows the supply schedule for Rolling Rock Oil Co. Plot Rolling Rock’s supply curve on a graph. Price (dollars per barrel) Quantity Supplied (barrels per month) $5 10,000 10 15,000 15 20,000 20 25,000 25 30,000 3-4 Market Equilibrium Price and Quantity True or False (Why): If the price charged is less than the equilibrium price, a shortage will occur. When both supply and demand increase for a certain good, what would happen to the equilibrium price and quantity of the good?

3-1 Competitive Markets True or False (Why): In a competitive market, buyers and sellers have significant market power. 3-2 Demand What is the difference between an individual demand curve and a market demand curve? If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash? If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if incomes increase? What would be the effects of each of the following on the demand for hamburger in Hilo, Hawaii? In each case, identify the responsible determinant of demand. a) The price of chicken falls. b) The price of hamburger buns doubles. c) Scientists find that eating hamburger prolongs life. d) The population of Hilo doubles. 3-3 Supply What is the reason that a supply curve is positively sloped? If the price of corn rose, a) What would be the effect on the supply of corn? b) What would be the effect on the supply of wheat? The following table shows the supply schedule for Rolling Rock Oil Co. Plot Rolling Rock’s supply curve on a graph. Price (dollars per barrel) Quantity Supplied (barrels per month) $5 10,000 10 15,000 15 20,000 20 25,000 25 30,000 3-4 Market Equilibrium Price and Quantity True or False (Why): If the price charged is less than the equilibrium price, a shortage will occur. When both supply and demand increase for a certain good, what would happen to the equilibrium price and quantity of the good?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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3-1 Competitive Markets

True or False (Why): In a competitive market, buyers and sellers have significant market power.

3-2 Demand

What is the difference between an individual demand curve and a market demand curve?
If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash?
If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if incomes increase?
What would be the effects of each of the following on the demand for hamburger in Hilo, Hawaii? In each case, identify the responsible determinant of demand.
a) The price of chicken falls.
b) The price of hamburger buns doubles.
c) Scientists find that eating hamburger prolongs life.
d) The population of Hilo doubles.

3-3 Supply

What is the reason that a supply curve is positively sloped?
If the price of corn rose,
a) What would be the effect on the supply of corn?
b) What would be the effect on the supply of wheat?
The following table shows the supply schedule for Rolling Rock Oil Co. Plot Rolling Rock’s supply curve on a graph.

Price (dollars per barrel) Quantity Supplied (barrels per month)

$5 10,000

10 15,000

15 20,000

20 25,000

25 30,000

3-4 Market Equilibrium Price and Quantity

True or False (Why): If the price charged is less than the equilibrium price, a shortage will occur.
When both supply and demand increase for a certain good, what would happen to the equilibrium price and quantity of the good?

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