chapter4 ��

chapter4 �� - ECO 490 Luhao Qiu Chapter 4 The...

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ECO 490 Luhao Qiu Chapter 4 The answer to TEST YOURSELF 2 C 4 C 6 C 8 2. The answers to all three parts are shown in Figure 1 (a) The equilibrium price is $2.00, and the equilibrium quantity is 26,000, as shown by the intersection point E. (b) The decrease in the price of beef increases the supply of hamburgers, the line shifts from S0 to S1. The equilibrium price falls and the equilibrium quantity rises. For example , point F is shown. (c) An increase in the price of pizza raise the demand for hamburgers, the original demand curve D0 shift to D1, and equilibrium price rises and also raises the equilibrium quantity. For example, Point H is shown. 4. The answers to all three parts are shown in Figure 2 (a) The equilibrium price is $65, and the equilibrium is 1,300. (b) The price ceiling is $55, the price limit is in effect. The quantity sold falls to 700, the seller will only offer 700, even the demand quantity is 1,300. Because price ceiling is a maximum that the price charged for a commodity cannot exceed. (c) When increasing the efficiency of textbook production, the supply curve will shift to outward to the right. (line S1). In figure 2, if the price is $55, the quantity has risen to 1,750(H point shows). So the quantity will rises. But it also could not meet the demand. Under the price ceiling, supply could increase at
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This note was uploaded on 03/10/2011 for the course ECO 490 taught by Professor Dr.li during the Spring '11 term at Uni. of Nottingham Ningbo.

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chapter4 �� - ECO 490 Luhao Qiu Chapter 4 The...

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