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Macroeconomics

David Colander

Chapter 5

Using Supply and Demand - all with Video Answers

Educators

Chapter Questions

Problem 1

Say that the equilibrium price and quantity both rose. What would you say was the most likely cause? LO1

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Problem 2

Say that equilibrium price fell and quantity remained constant. What would you say was the most likely cause? LO1

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Problem 3

The technology is now developing so that road use can be priced by computer. A computer in the surface of the road picks up a signal from your car and automatically charges you for the use of the road. How would this affect bottlenecks and rush-hour congestion? LO1

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01:28

Problem 4

Demonstrate the effect on price and quantity of each of the following events:
a. In a recent popularity test, Elmo topped Cookie Monster in popularity (this represents a trend in children's tastes). Market: cookies.
b. The Atkins Diet that limits carbohydrates was reported to be very effective. Market: bread. LO1

Crystal Wang
Crystal Wang
Numerade Educator
07:57

Problem 5

In 2004, oil facilities in Iraq were attacked and strong economies in the United States and China boosted the demand for oil.
a. Demonstrate graphically how these events led to increases in oil prices in June 2004. What was the effect on the equilibrium quantity of oil bought and sold?
b. As a result of political pressure, OPEC agreed to increase the daily quota by 2 million barrels a day. What was the likely effect on equilibrium oil price and quantity? Demonstrate your answer graphically. LO1

John Lee
John Lee
Numerade Educator
01:57

Problem 6

Kennesaw University Professor Frank A. Adams III and Auburn University Professors A. H. Barnett and David L. Kaserman recently estimated the effect of legalizing the sale of cadaverous organs, which currently are in shortage at zero price. What are the effects of the following two possibilities on the equilibrium price and quantity of transplanted organs if their sale were to be legalized? Demonstrate your answers graphically.
a. Many of those currently willing to donate the organs of a deceased relative at zero price are offended that organs can be bought and sold.
b. People are willing to provide significantly more organs. LO1

Achintya Suden
Achintya Suden
Numerade Educator
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Problem 7

The dollar price of the South African rand fell from 29 cents to 22 cents in 1996 , the same year the country was rocked by political turmoil. Using supply/demand analysis, explain why the turmoil led to a decline in the price of the rand. $\mathrm{LO} 2$

Rashmi Sinha
Rashmi Sinha
Numerade Educator
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Problem 8

In early 2004, following the toppling of President Aristide, the price of a 110 pound sack of rice in Haiti doubled from $$\$ 22.50$$ to $$\$ 45$$ because of disruptions at Haitian ports. (Eighty percent of Haiti's rice is imported.) Demonstrate graphically the effect of the import distuptions on the equilibrium price and quantity of rice purchased in Haiti. $\mathrm{LO} 2$

Lauren Long
Lauren Long
Numerade Educator
02:42

Problem 9

Demonstrate graphically the effect of an effective price ceiling. LO3

Crystal Wang
Crystal Wang
Numerade Educator
02:18

Problem 10

Demonstrate graphically why rent controls might increase the total payment that new renters pay for an apartment. $\mathrm{LO} 3$

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
02:42

Problem 11

Demonstrate graphically the effect of a price floor. LO3

Crystal Wang
Crystal Wang
Numerade Educator
01:57

Problem 12

Graphically show the effects of a minimum wage on the number of unemployed. LO3

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator

Problem 13

Demonstrate graphically the effect of a tax on producers of $$\$ 4$$ per unit on equilibrium price and quantity. LO4

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02:42

Problem 14

Quotas, like medallions, are quantity restrictions on imported goods. Demonstrate the effect of a quota on the price of imported goods. LO4

Crystal Wang
Crystal Wang
Numerade Educator
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Problem 15

The United States imposes substantial taxes on cigarettes but not on loose tobacco. When the tax went into effect, what effect did it likely have for cigarette rolling machines? (Difficult) LO4

Rashmi Sinha
Rashmi Sinha
Numerade Educator

Problem 16

In what ways is the market for public post-secondary education an example of a third-party-payer market? What's the impact of this on total educational expenditures? LO5

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01:01

Problem 17

What reasons might governments have to support third party-payer markets? (Difficult) LO5

EA
Erwin Antoni
Numerade Educator
03:49

Problem 18

You're given the following supply and demand tables:
(COLUMN CANT COPY)
a. What is equilibrium price and quantity in a market system with no interferences?
b. If this were a third-party-payer market where the consumer pays $$\$ 2$$, what is the quantity demanded? What is the price charged by the seller?
c. What is total spending in the two situations described in $a$ and $b$ ? LO5

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator