微观经济学41.doc

Review questions1. Why isnt knowing the cost of producing a good sufficient to predict its market price? Answer: the market consist of the buyers and the sellers, the cost of producing a good decided to the supply price, not for the demand price, the supply and the demand decided to the price, so the cost of producing a good sufficient cant to predict its market price.2. Distinguish between the meaning of the expressions “change in demand” and “change in the quantity demanded.” Answer: “change in the quantity demanded” means the change in the quantity that people wish to buy that occurs in response to a change in price, a “change in the quantity demanded” refers to a movement along the demand curve. But “the change in demand” means a shift in the entire demand curve. 3. Last year a government official proposed that gasoline price controls be impose to protect the poor from rising gasoline prices. What evidence could you consult to discover whether this proposal was enacted? Answer: against. Because when the government official protects the gasoline prices, the supply will decrease, and the demand will increase. The supply didnt content to the demand. It will result in excess demand. Its not good for the market.4. Explain the distinction between the horizontal and vertical interpretations of the demand curve. Answer: the horizontal interpretations of the demand curve what we can know any good as a schedule telling how much of it consumers wish to purchase at various prices. And the vertical interpretations of the demand curve which is to start quantity on the horizontal axis and then read marginal buyers reservation price on the vertical axis.5. Give an example of behavior you have observed that could be described as “smart for one but dumb for all.” Answer: for example, if a man buy a thing which is the last good in the store, and he got it just cost 50percent of the normal price. Its cheaper than before and it smart to him. But if the markets sell that good about this price, the sellers would deficit. It maybe causes the economic downtown. Its not very good for society. So “smart for one but dumb for all.”Problems1. State whether the following pairs of goods are complements or substitutes.(If you think a pair is ambiguous in this respect,explain why) a.Tennis courts and squash courts. (substitutes) b.Squash racquets and squash balls.（complements） c.Ice cream and chocolate.（substitutes） d.Cloth diapers and paper diapers.（substitutes）2. How would each of the following affect the U.S.market supply curve for corn? a.A new and improved crop rotation technique is discovered. (supply shifts right) b.The price of fertilizer falls. (supply shifts right) c.The government offers new tax breaks to farmers. (supply shifts left) d.A tornado sweeps through Iowa. (supply shifts left)3.Indicate how you think each of the following would shift demand in the indicated market: a.Incomes of buyers in the market for Adirondack vacations increase.(demand shifts right) b.Buyers in the market for pizza read a study linking hamburger consumption to heart disease.(demand shifts right) c.Buyers in the market for CDs learn of an increase in the price of audiocassettes(a substitute for CDs).( demand shifts right) d.Buyers in the market for CDs learn of an increase in the price of CDs.( demand shifts right)4.An Arizona student claims to have spotted a UFO over the desert outside of Tucson. How will his claim affect the supply (not the quantity supplied) of binoculars in Tucson stores? Answer: the supply would not change. Reason: a student claims to have spotted a UFO over the desert, that cause the quantity demand increase, and the quantity supply increase. But thats not affect the supply. So the supply would not change.5.What will happen to the equilibrium price and quantity of oranges if the wage paid to orange pickers rises? Answer: the equilibrium price would increase, and the equilibrium quantity will decrease. Reason: when the orange pickers rises, the cost of product orange will rise, and the supply curve shifts left. So the equilibrium price will increase, and the equilibrium quantity will decrease.6.How will an increase in the birth rate affect the equilibrium price of land? Answer: the equilibrium price of land would increase, because the birth rate in crease cause the demand increase, the demand curve shifts right. The equilibrium price will increase.7.What will happen to the equilibrium price and quantity of fish if fish oils are found to help prevent heart disease? Answer: the equilibrium price and the equilibrium quantity will increase. It causes the demand increase if fish oils are found to help prevent heart disease, and the demand curve shifts right. So the equilibrium price and quantity will increase.8.What will happen to the equilibrium price and quantity of beef if the price of chickenfeed increases? Answer: the equilibrium price would decrease and the equilibrium quantity would increase. While the price of chickenfeed increases, the price of chicken would increases. And the supply of beef would increase, the supply curve shifts right. So the equilibrium price would decrease and the equilibrium quantity would increase.9.Use supply and demand analysis to explain why hotel room rental rates near your campus during parents weekend and graduation weekend might differ from the rates charged during the rest of the year. Answer: parents weekend and graduation weekend will affect the demand, that causes the demand increase, and the demand shifts right. The hotel room rental rates would upward, so the rates differ from the rest of the year.10.How will a new law mandating an increase in required levels of automobile insurance affect the equilibrium price and quantity in the market for new automobiles? Answer: the equilibrium price and quantity would decrease. Automobile insurance will cause the demand decrease, the demand curve shifts left. So the equilibrium price and quantity would decrease. 11. Suppose the current issue of the New York Times reports an outbreak of mad cow disease in Nebraska, as well as the discovery of a new breed of chicken that gains more weight than existing breeds that consume the same amount of food. How will these developments affect the equilibrium price and quantity of chickens sold in the United States? Answer: the equilibrium price is unsure and the equilibrium quantity would increase. The mad cow disease might cause the demand of the beef decrease. The chicken and the beef are substitute. So the demand of chicken would increase, the demand curve shifts right. And the chicken needs less food, the supply curve of chicken would shift right. So the equilibrium price is unsure and the equilibrium quantity would increase.12.What will happen to the equilibrium quantity and price of potatoes if population increases and a new, higher-yielding variety of potato plant is developed? Answer: the equilibrium price is unsure and the equilibrium quantity would increase. When the population increases, the demand of potatoes might increase. The demand curve shifts right. And a new, higher-yielding variety of potato plant developed causes the supply curve of potatoes shift right. So the equilibrium price is unsure and the equilibrium quantity would increase.13.What will happen to the equilibrium price and quantity of apples if apples are discovered to help prevent colds and fungus kills 10 percent of existing apple trees? Answer: the equilibrium price would increase and the equilibrium quantity is unsure. The apples help prevent colds might cause the demand increase, the demand curve shifts right. But the fungus kills 10 percent of existing apple trees, the supply curve would shift left. So the equilibrium price would increase and the equilibrium quantity is unsure.14.What will happen to equilibrium quantity and price of corn if the price of butter (a complement) increases and the price of fertilizer decreases? Answer: the equilibrium price would decrease and the equilibrium quantity is unsure. When the price of the butter increases, the demand of corn will be low. But the price of fertilizer decreases, it makes the cost of the corn decreases. The supply curve and the demand curve shift right. So the equilibrium price would decrease and the equilibrium quantity is unsure 15.Twenty-five years ago, tofu was available only from small businesses operating in predominantly Asian sections of large cities. Today tofu has become popular as a high-protein health food and is widely available in supermarkets throughtout the United States. At the same time, tofu production has evolved to become factory-based using modern food-processing technologies. Draw a d