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Question 1

The graph below shows the supply and demand curves for refrigerators. Show the equilibrium by clicking on the graph to place a dot at the place where the equilibrium point is.

Clear All Draw: Dot

Hint

Box 1: Enter your answer by drawing on the graph.

Question 2

Here are the equations for the demand and supply curves:

Demand curve: `Qd=2500-3 P`

Supply curve: `Qs=1000+2 P`

Compute the equilibrium price value:

Demand curve: `Qd=2500-3 P`

Supply curve: `Qs=1000+2 P`

Compute the equilibrium price value:

Hint

Box 1: Enter your answer as an integer or decimal number. Examples: 3, -4, 5.5172

Enter DNE for Does Not Exist, oo for Infinity

300

Question 3

Compute the equilibrium quantity value:

Hint

Box 1: Enter your answer as an integer or decimal number. Examples: 3, -4, 5.5172

Enter DNE for Does Not Exist, oo for Infinity

1600

Question 4

Suppose Congress cuts personal income tax rates. Which graph most accurately shows how this would affect the market for refrigerators? Note that the new curve is shown in grey.

Hint

Box 1: Select the best answer

Demand curve shifts right:

Question 5

Why does the demand or supply curve shift the way it does and what element of demand caused the shift? How does that affect the equilibrium price and quantity?

Hint

Box 1: Enter your answer as text. This question is not automatically graded.

A decrease in tax rates effectively increases your income. An increase in income generally increases demand. Therefore demand curve shifts to the right to show an increase in the equilibrium price and quantity.

Question 6

Suppose that refrigerator workers accept a pay cut of 2 dollars per hour. Which graph most accurately shows how this would affect the market for refrigerators? Note that the new curve is shown in grey.

Hint

Box 1: Select the best answer

Supply curve shifts right:

Question 7

Why does the demand or supply curve shift the way it does and what element of demand caused the shift? How does that affect the equilibrium price and quantity?

Hint

Box 1: Enter your answer as text. This question is not automatically graded.

A pay cut decreases production costs for the firm. A decrease in production cost generally increases supply. Therefore supply curve shifts to the right to show a decrease in the equilibrium price and an increase in the equilibrium quantity.