Question Details

Week 5 : Market Structure: Monopoly and Monopolistic Competition - Assignment #2 
1. From 2001 to 2004, the real price of eggs decreased and the total annual consumption of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs and an unambiguous decrease in the quantity of eggs consumed? (Points : 2) 
       A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs.
       A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs.
       A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.
       None of the above.


2. What will be the effect on the supply curve, and what will happen to market equilibrium price and quantity in the short run, if: the price of the product falls? (Points : 2) 
       Supply decreases; equilibrium price rises and quantity falls.
       Supply increases; equilibrium price falls and quantity rises.
       This is a movement along the supply curve, and the quantity supplied will decrease.
       Supply increases (now); equilibrium price falls and quantity rises.


3. What will be the effect on the supply curve, and what will happen to market equilibrium price and quantity in the short run, if: The government requires pollution control filters that raise production costs? (Points : 2) 
       Supply decreases; equilibrium price rises and quantity falls.
       Supply increases; equilibrium price falls and quantity rises.
       This is a movement along the supply curve, and the quantity supplied will decrease.
       Supply increases (now); equilibrium price falls and quantity rises.


4. What will be the effect on the demand curve, and what will happen to market equilibrium price and quantity in the short run if, the price of a substitute good rises. (Points : 2) 
       Demand increases (now); equilibrium price and quantity increase.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       This is a movement along the demand curve, and the quantity demanded will decrease.


5. Industry supply and demand are given by: QD = 1000 - 2P and QS = 3P. At a price of $100, will there be a shortage or a surplus, and how large will it be? (Points : 2) 
       There will be a surplus of 100
       There will be a shortage of 300
       There will be a shortage of 500
       There will be a surplus of 800
       There will be a surplus of 600


6. 
The eThe effect on sales of an increase in price is a decrease in:
(Points : 2) 
       the quantity demanded.
       demand.
       supply.
       the quantity supplied.
       Both b and c
       none of the above


7. If the monopolist represented in Graph 2 were to behave like a perfect competitive firm operating in the long run, determine its output. (Points : 2) 
       0E
       0L
       0M
       JK
       Not enough information to determine it


8. From Graph 1, determine the price at which the profit maximizing level of output will be sold. (Points : 2) 
       P4
       P3
       P2
       P1
       Cannot tell as there is not enough information


9. From Graph 1, identify the firm- short run supply curve (Points : 2) 
       Points abcd
       Points abf
       Points bcd
       Points acf
       None of the above.


10. Industry supply and demand are given by: QD = 1000 - 2P and QS = 3P. At a price of $300, will there be a shortage or a surplus, and how large will it be? (Points : 2) 
       There will be a surplus of 100
       There will be a shortage of 300
       There will be a shortage of 500
       There will be a surplus of 800
       There will be a surplus of 600

Answer: There will be a surplus of 500

11. From 2000 to 2010, the real price of a college education increased, and total enrollment increased. Which of  the following could have caused this increase in price and enrollment? (Points : 2) 
       A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education.
       A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education.
       A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education.
       None of the above.


12. What will be the effect on the supply curve, and what will happen to market equilibrium price and quantity in the short run, if: Producers expect that the price of the product will fall in the future? (Points : 2) 
       Supply decreases; equilibrium price rises and quantity falls.
       Supply increases; equilibrium price falls and quantity rises
       This is a movement along the supply curve, and the quantity supplied will decrease
       Supply increases (now); equilibrium price falls and quantity rises.


13. 
PetroCPetrochemical engineers can vary the mix of gasoline versus diesel fuel derived from a barrel of oil. If the price of diesel fuel increases relative to the price of gasoline:
(Points : 2) 
       supply of gasoline will shift to the right.
       supply of gasoline will shift to the left.
       supply of both diesel fuel and gasoline will shift, but in opposite directions
        
supply of diesel fuel will shift to the right.

       None of these


14. What will be the effect on the supply curve, and what will happen to market equilibrium price and quantity in the short run, if: Wages of workers in this industry fall? (Points : 2) 
       Supply decreases; equilibrium price rises and quantity falls.
       Supply increases; equilibrium price falls and quantity rises.
       Supply increases; equilibrium price falls and quantity rises.This is a movement along the supply curve, and the quantity supplied will decrease.
       Supply increases (now); equilibrium price falls and quantity rises.


15. 1. The annual Supply and demand for the Paper Firm is given by: 
 
QS = 100P - 5000
and
QD = 0.5 I + 0.2 A  - 100P + 5000
where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.
 
a.	If A = $10,000 and I = $25,000, what is the demand curve?
Answer: QD = 19,500 - 100P.
b.   Plot the demand curve found in part a with the supply curve, then use the graph to find the equilibrium price and quantity.
c.   If consumer incomes increase to $30,000, what will be the new equilibrium price and the new equilibrium quantity?
Answer: New equilibrium price = $135
New equilibrium quantity = 8500. 
**Please post answers in the answer box and post the graphs in DOC SHARING. Thanks. (Points : 5) 

        


16. 
Holding all else equal, if supply increases, the:
(Points : 2) 
       equilibrium price will decrease while the quantity produced and sold could increase, decrease or remain constant.
       quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant.
       equilibrium price will increase while the quantity produced and sold could increase, decrease or remain constant.
       none of these.


17. What will be the effect on the demand curve, and what will happen to market equilibrium price and quantity in the short run if, Consumer incomes fall, and the good is inferior. (Points : 2) 
       Demand increases (now); equilibrium price and quantity increase.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       This is a movement along the demand curve, and the quantity demanded will decrease.


18. What will be the effect on the demand curve, and what will happen to market equilibrium price and quantity in the short run if, Consumer incomes fall, and the good is normal. (Points : 2) 
       Demand increases (now); equilibrium price and quantity increase.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       This is a movement along the demand curve, and the quantity demanded will decrease.


19. What will be the effect on the demand curve, and what will happen to market equilibrium price and quantity in the short run if the price of the product rises? (Points : 2) 
       Demand increases (now); equilibrium price and quantity increase.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       Demand increases; equilibrium price and quantity increase.
       Demand decreases; equilibrium price and quantity fall.
       This is a movement along the demand curve, and the quantity demanded will decrease.

20. From Graph 2, What is the Profit per unit at the profit maximizing level of output? (Points : 2) 
       BH
       HG
       JH
       HE
       KL
       BHG


21. Industry supply and demand are given by: QD = -2P + 1000 and QS = 0 + 3P 
What is the equilibrium price and quantity? (Points : 2) 
       P = 200, Q = 60.
       P = 20, Q =600
       P = 500, Q = 15
       P =200, Q = 600
       None of the above