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Supply and Demand

Supply and demand is a central topic to the study of economics because it models how price is determined in a market. The model shows that price will shift until the quantity supplied by producers is equal to the quantity demanded by consumers. This is when an economic equilibrium occurs, when quantity supplied and quantity demanded are equal.

The supply is defined by the relationship between quantity supplied and the price of a good or service. The supply curve is generally upward sloping implying that producers are willing to produce more units as price for the good increases and they are able to sell at a higher price. The demand curve is defined by the relationship between quantity supplied and the price of a good or service. The demand curve is generally downward sloping implying that consumers are willing to purchase more units of a good or service as the price decreases. 

According to neoclassical economics, the market will always trend back towards equilibrium in the long run. This is conditional on an efficient market structure where the price signals are readily available to all consumers and producers; there are no asymmetries of information or other inefficiencies. 

Comparing Supply-Demand Equilibrium: Competition vs Monopoly

The widget industry is perfectly competitive. The industry demand and supply functions for widgets are given below. Qd = 424 - 40P Qs = 40 + 8P What is the equilibrium price and quantity for the industry? If the government establishes a price floor of $9, explain what will result in terms of excess demand or supply. If t

Electricity market's volatility

There are a number of factors which cause the electricity market's volatility. The peak and off-peak usage of energy, the fluctuating costs of the fossil fuels which are used to create electricity and the stability of the delivery infrastructure are just a few of the items that affect energy prices. Compare and contrast the opti

Describing Two Markets: Elastic and Inelastic Demand

Write a short essay identifying and describing two markets of your choosing; the first characterized by an elastic demand and the second one by an inelastic demand. Indicate why your choices have the relative elasticities they do. Market One: What are some of the goods you purchase in your life for which your demand is mos

Demand, Supply and Market Equilibrium

1. Using the demand curve shifters (PYNTE), explain whether each of the following will increase or decrease demand for cell phones. Tell whether the demand curve shifts to the right or to the left. a. A decrease in the incomes of consumers of cell phones. b. An increase in the price of apps for cell phones. c. An increa

Health Care: Number of Healthy Days vs. Price of Treatments

Can I get some help to solve this please. Contact me if more credits are required. Use the information below to determine the relationship between price and health status in this model. In other words, solve for D and for P, and set up two equations: one showing the value of D in terms of P; and one showing the value of P in

Are Commodity Prices Reflective of Demand and Supply?

Are commodity prices reflective of demand and supply? Write a 4 to 5 page paper in which you analyze one of the below markets. Look up the historical prices of the commodity of your choosing. Consider what factors of demand and supply have caused changes in the commodity price. Explain how you would expect global news/events to

Jumpstarting the Economy

Rank which of the following five changes are preventing the aggregate demand curve from shifting outward and jump-starting the economy (list 1 as the most important and 5 as the least). Please explain why you ordered the ranking as you did. 1. Changes in income 2. Changes in expectations (consumer confidence) 3. Changes in we

Supply and Demand in a Car Dealership

Alexander Corporation is a used car dealership serving Los Angeles Metropolitan area. The company has experienced a rather sharp decline in used car prices in recent years. A casual observation of the secondary car market by the management reveals that this is an industry wide national trend and it is not specific to the Alexa

Consumer Theory, Discount Rate, FED Selling Short Term Securities

1. In your own words, describe what is meant by an open market operation. Explain in detail how the FED can use open market operations to help stimulate credit, production, and employment. 2. "Operation Twist" involves the FED selling its short term securities, while purchasing long term securities. This is an effort to lowe

Tax Rate, Tax Revenues, and Equilibrium Quantity of Capital

1. In an economy, the supply curve of labour, S, is given by: S = -100 + 200W_n Where W_n is the after-tax wage rate. Assume that the before-tax wage rate is fixed at 10. a) Write a formula for tax revenues as a function of the tax rate, and sketch the function in a diagram with the tax rate, and sketch the function in a dia

Basic Concepts in Managerial Economics

Use the following general linear supply function to answer this question: Qs = 40 + 6P - 8PI + 10F Where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. If PI = $20 and F = 60 what is the equation of the supply function? Qs

How Public and Private Decisions Affect Price Levels and Supply/Demand

Discuss the situation by writing the solutions, and then show the solutions Scenario One In the early part of the last decade, there was an overproduction of coffee. The price dropped so low that producers' costs were higher than the market price. The reason this happened was that market prices became high before this,

Supply and Demand Concepts.

As an economist for ABC Plastics, your boss has asked you to respond to some questions she has regarding the company's main product, tablet cases. A marketing research firm recently developed the following supply and demand schedules for tablet cases: (please see attachment) You are to develop a report addressing the followin

Monetary Policy: Effect of an announced future increase in the money supply

If the demand for money depends positively on real income and depends inversely on the nominal interest rate, what would happen to the price level today if the central bank announces (and people believe) that it will decrease the money growth rate in the future, but it does not change the money supply today?

Unitended Consequences: Application of Supply and Demand

Mastering the economic way of thinking means learning to reason in terms of supply and demand. Here are additional questions on which you can practice. Your answers are less important than the reasoning with which you arrive at those answers. You should probably begin in each case by sketching a small supply and demand graph. Th

Effects of Decrease in Government Spending on Savings and Investment

Please explain the likely effects on Savings (Gross Private Domestic) Investment, Long Term Real Interest Rates, The Capital Stock, Natural RGDP and Natural Per Capita RGDP of a decrease in Government Investment Spending (with no change in tax rates). Please explain this in about two pages double spaced, and include information

Economics Exam Review: Supply and Demand Concepts

I have recently been hired by a new firm selling electronic dog feeders. My client has asked me to gather some data on the supply and demand for the feeder, which is given below, and address several questions regarding the supply and demand for these feeders. Price/Feeder Quantity Demanded Quantity Supplied $300 500 1800

Strong Dollar

Your company operates in the MS Delta and imported inputs are used in the final product. The final product is then exported to the rest of the world. The Secretary of the Treasury, Tim Geithner, made the following statement to the Chinese students at Beijing State University some time ago in an attempt tame fears that the US i

Maximizing profit question

Imagine that we are selling bottles of CocaCola in a vending machine. Currently, we charge $1.50 per bottle and have found through trial-and-error that if we raise the price by 1%, the quantity purchased will change by approximately -2% ( other words, ?=2). If it will cost us approximately $0.75/bottle to supply more Coke

Economics Question Set

Question 1 The method in which experimenters observe the impact of an event, such as increased advertising or a sale price, on actual purchases made by experimental groups of consumers is called Consumer focus groups The consumer survey A statistical demand analysis The barometric method Questio

Economics Study Guide

Question 1 Among the reasons economists consider economic profit to be the best measure of a company's performance is Accounting profit is difficult to measure. Explicit costs are fully accounted for in economic but not accounting profit. Estimating income for tax purposes only includes explicit costs. The

Concepts in Microeconomics

Indicate whether each of the following statements is true or false, and explain why. If a statement is false or true, please provide a full explanation as to why that statement is correct or not. a. Consumer surplus is the difference between the minimum and maximum price a consumer is wiling to pay for a good. b. Producer s

Producer Surplus & Correcting for Spillover Costs or Externalies

Question 1. Draw a supply and demand graph and identify the areas of consumer surplus and producer surplus. Given the demand curve, what impact will an increase in supply have on the amount of consumer surplus shown in your diagram? Explain why? Question 2. Why are spillover costs and spillover benefits also called negative

Demand and Supply Curves, etc.

I recently bought skim milk instead of soy milk because the skim milk was less expensive. (It could be a purchase of anything, soda, fast food meals, etc.) I used milk because that is what I specifically bought and why. 1. Please help me explain how the law of demand affected my purchase. 2. Give specific examples of how

Money and Banking.

Please read the following topic and answer those three questions below at the bottom MONEY & BANKING The Congressional Budget Office (CBO) on August 25, 2009 estimated that the accumulated deficit from 2010-19 will approximate $7.137 trillion. Fiscal deficit in 2010 is estimated at $1.3 trillion or a post-War II record

Supply and Demand: E-Readers in Short Supply

Robbie Trencheny, an 18-year-old high school senior, loaded half a dozen textbooks and novels into his Nook digital reading device as soon as he received it as a birth-day present from his parents this month. "I don't have to carry textbooks with me anymore," said Trencheny, who also bought a few books on the device for leisure