Microeconomics Quiz 2 Supply and Demand

Microeconomics Quiz 2 Supply and demand

1. Select any one good or service: ______a. List several factors that may change the demand for this product by consumers.

b. List several factors that may change the supply of this product by producers.

2. Suppose that the market for home computers is in equilibrium. Determine how the following sudden change will shift supply or demand for computers, everything else held the same. Draw a graph, show what changes, mark the old and the new price and quantity. Explain in one sentence. a) Computers become easier to use.

b) The price of computer hard drives (inputs into production) fall due to outsourcing to low wage countries. 3. McDonalds sells French Fries, Big Macs, and Hash Browns. McDonalds announces that it has reduced the level of artery-clogging fatty acids and saturated fats in the oil it uses for frying French Fries. Big Macs and French Fries are most often sold together in combo meals. Hash Browns and French Fries are substitutes. Draw three graphs illustrating equilibrium in the market for French Fries Big Macs and Hash Browns before and after the change. Show what happens to prices and quantities.

4. Domestic car companies have been offering terrific deals—discounts, and interest-free loans—to move the merchandise in a sluggish economy. Their efforts have been fairly successful—a lot of people have been trading in their old cars. This has created a problem, though: Used car lots are overflowing with the trade- ins! This has led to a big drop in prices of used cars and to lower trade-in prices. Graph supply and demand curves for the used-car market, show the impact of the trade-in incentives.

5. A restaurant's supply curve stays the same throughout the day, but the demand for its food differs for lunch and dinner. a. Graph supply and demand curves below. Find the equilibrium price of lunch and dinner. b. Describe the state of the market (surplus, shortage, equilibrium?) when the price is $4 per meal.

Meal Supply Lunch Dinner Price Demand Demand $16 220 5 30 $14 210 25 60 $10 200 80 120 $8 190 150 250 $6 180 250 400 $4 170 400 600