ECON 200 Demand Problems Solution
ECON 200 Demand Problems
Demand
Which of the following scenarios is an example of a person interacting outsi
... [Show More] de of a market?
Mark places his comic book collection up for sale on eBay.
Young buys fresh radishes at the local farmers’ market.
Melissa votes for her favorite performer at a local talent show.
Isabella agrees to fix Miguel’s sink if Miguel paints Isabella’s porch.
A market price:
is a price at which buyers and sellers agree to exchange money for a good or service.
is any price at which buyers desire to purchase a good or service.
is a price dictated by a government agency before trading can begin.
is any price at which sellers desire to sell their good or service.
Markets can:
force buyers to buy things they do not want to buy.
force producers to make things they do not want to make.
make buyers and sellers better off.
provide unlimited goods and services.
Which of the following is something that markets cannot do?
Determine the equilibrium price of a good or service
Provide unlimited goods and services
Determine the equilibrium quantity of a good or service
Make buyers and sellers better off
Demand curve Exercise: Use the table below to complete the question. This table represents the demand for peaches in Hoboken, a town in New Jersey.
a. Graph the information presented in the table.
b. If the market price for peaches is $8 per pound, what is the quantity of peaches demanded in Hoboken?
20 pounds
14 pounds
38 pounds
26 pounds
The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day.
If the price of a bottle of sunscreen is $8, what will be the quantity demanded?
6,400 bottles
8,000 bottles
1,600 bottles
6,000 bottles
Everyone’s individual demand for a particular good or service can be represented by the same demand curve. False
People do not always purchase all of the things they want. True
Consider each of the following scenarios and determine whether it is an example of the income effect, the substitution effect, or diminishing marginal utility.
a. Sasha likes to treat herself to a small latte each afternoon. On Wednesdays, when the coffee shop decreases the price of lattes, Sasha buys a large latte instead. Income effect
b. The price of chicken nuggets rises from $3 to $3.50 for a box of six. The price of hamburgers stays the same. Mateo used to eat chicken nuggets three times a week. All else equal, he now eats them twice a week. Substitution effect
c. Jack offers Victoria a plate of a dozen chicken wings. Victoria enjoys the first wing the best, the second wing a little bit less, and by the seventh wing, she has had enough and chooses not to eat the remaining five wings. Diminishing marginal utility
Which of the following best explains why people eventually stop eating when they dine at an “All You Can Eat” buffet?
Substitution effect
Income effect
Increasing marginal cost
Diminishing marginal utility
Marcus budgets $120 a week for groceries. When the price of all food goes up by 10% he buys less salmon. This can best be explained by:
diminishing marginal utility.
the income effect.
the substitution effect.
a change in income.
Juan likes both hot dogs and burritos. All else equal, when the price of hot dogs rises, he buys more burritos. This can best be explained by:
diminishing marginal utility.
the substitution effect.
increasing marginal cost.
the income effect.
Market Demand Exercise: The table below represents the quantity of rice demanded for selected countries.
a. Fill in the market quantity of rice demanded (column “Market”) for each given price.
b. What is the quantity of rice demanded in the market (in millions of metric tons) if the market price is $400 per metric ton? 14
Change in Demand Exercise: The table below describes the demand for bathing suits on a warm, summer day in the resort town of Wisconsin Dells:
a. Graph the demand curve for bathing suits.
b. Due to an influx of tourists, the quantity of bathing suits demanded increases by 15 bathing suits at every price. Complete the column in the table below.
The table below shows the quantity of funnel cakes demanded at the West Virginia State Fair.
a. Graph the demand curve for funnel cakes.
b. On rainy days the demand for funnel cakes at the West Virginia State Fair decreases by 1000 cakes at every price. Complete the table below by filling in the quantity of funnel cakes demanded on a rainy day.
Determinants of Demand: The quantity demanded for cars monthly is shown in the table below.
An increase in income increases the quantity demanded by 10% at every price. Which of the following columns represents the new monthly quantity demanded for cars (in thousands of cars)?
Column C
On average, about 3,500 new mobile homes are sold every month at an average price of $40,000. In 2013 average income in the United States rose and, all else equal, mobile home sales decreased. From the information given, it is reasonable to conclude that mobile homes: are inferior goods.
For each situation below, state whether it is an example of the income effect changing quantity demanded or an example of a change in income shifting demand.
a. The mean income in Detroit rises and people purchase more homes.
Change in income shifting demand
b. The price of frozen pizza decreases, making frozen pizza more popular among college students.
Income effect changing quantity demanded
c. A recession forces many people out of work and more people purchase ramen noodles than before.
Change in income shifting demand
d. An increase in the price of game consoles decreases sales, as fewer people can afford them.
Income effect changing quantity demanded
Identify which of the following scenarios is likely to shift the demand for wheat bread to the right.
The population of Arizona grows by 20%.
A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months.
People learn that certain bread additives may be bad for their health.
As people become more health conscious, they discover the benefits of whole wheat as a part of their diet.
Executives at an advertising agency want to increase the demand for the energy drink it promotes. What advice should they give the producer?
Announce a future decrease in the price of the drink
Sell the drink for a lower price
Sell the drink for a higher price
Hire a prominent athlete to demonstrate the benefits of the drink
Which of the following is most likely to decrease the demand for Mango Jarritos, a popular Mexican soft drink?
Concerns over the empty calories soft drinks contain cause more people to drink mineral water.
More people visit Mexico and embrace its cuisine.
The health benefits of mangoes become widely known.
The birth rate in the southern United States and Mexico increases.
Tastes and preferences generally do not change for goods or services in markets. False
Pam sees that the price of bananas has risen in the grocery store. All else equal, she decides to buy more tangerines than she normally purchases. From the information given, you might conclude that:
bananas are a luxury good.
tangerines are an inferior good.
tangerines and bananas are substitutes.
tangerines and bananas are complements.
Managers at a local home improvement store see that new home sales in their area have increased. They order more refrigerators for their store. They likely do this because they assume that:
new homes and refrigerators are complements.
new homes and refrigerators are substitutes.
refrigerators are inferior goods.
refrigerators are normal goods. [Show Less]