Economics Supply and Demand Test

Transcription

1 Economics upply and emand Test efinitions: efine each of the terms below 1. carcity 2. hortage 3. Opportunity Cost 4. Law of emand 5. Factors of roduction: List the factors of production and define each one a. b. c. d.

2 6. eterminants of emand eterminants of upply II. roblems: Use your knowledge of Economics to create the graphs below On the Graph below, show how a price floor would change the market. Explain why the government would use a price floor. Q On the graph below, show how a price ceiling would change the market. Explain why the government would use a price ceiling. Q

3 II. Graphs and Explanations 10 points each, 5. roduction ossibilities Curve Guns 12 X 10 A 5 Y B Z Butter i. At the present time, is it possible for the economy represented by the graph above to produce at point A? Explain. ii. If the country represented in the C above is currently producing at point X (10 guns and 4 butter), what would be the opportunity cost of moving to point Y (producing 5 guns and 11 butter)? iii. How does the C above represent increasing opportunity costs? Hint: compare opportunity cost of moving from X to Y with the opportunity cost of moving from Y to Z (12 butter and no guns).

4 8. Fish farming has changed significantly in the past 20 years. Mirroring developments in the green revolution, the blue revolution has seen companies breeding fish to improve traits such as their growth rate, conversion of feed into flesh, resistance to disease, tolerance of cold and poor water, and fertility. Breeding tilapia (a freshwater, plant-eating fish popular in America) has produced tilapia that is hardier and grows 60% faster than the wild variety. how and explain how breeding has changed the market for Tilapia. Q Market: Tilapia (Fish) eterminant id the determinant affect emand or upply? Effect on rice: Increase, ecrease, or no change? Effect on Quantity: Increase, ecrease or No change? Using economic terms, explain the changes in the market for Talapia.

5 9. ales in the market for all kinds of farmed fish are growing in North America by 12-13% a year in recent years. A decade ago, Costco, a big retailer, did not even stock fresh fish. Now it sells 15,000 tons of farmed salmon fillets a year. The same story applies to shrimp, now America's most popular seafood. how and explain what has hapned to the market for fresh fish in the U during the past 10 years. Q b. Market: fresh fish in the United tates eterminant id the determinant affect emand or upply? Effect on rice: Increase, ecrease, or no change? Effect on Quantity: Increase, ecrease or No change? Using economic terms, explain the changes in the market for almon in the U.

6 10. The Flag industry has been affected by the events on and after. ince , the flag industry has boomed, but immediately after 9-11, there was a shortage of flags in the U. Because Americans were eager to show their patriotism to the attackers and the rest of the world, stores all over the nation sold out of United tates flags on eptember 12, Use the graph below to explain why there was a shortage of flags on Q flags Market: U flags eterminant id the determinant affect emand or upply? Effect on rice: Increase, ecrease, or no change? Effect on Quantity: Increase, ecrease or No change? Using economic terms, explain the changes in the market flags.

7 11. What would hapn to market for U flags if the wages for the workers increased after the flag workers union negotiates a new contract? Q flags Market: U flags eterminant id the determinant affect emand or upply? Effect on rice: Increase, ecrease, or no change? Effect on Quantity: Increase, ecrease or No change? Using economic terms, explain the changes in the market for flags.

8 10. Elasticity In the space below graph two demand curves for cell phones one for the whole industry and one for a single business based on the following information. Assume that several firms comte in the market for cellular phones, and that demand for phones in general is inelastic. Based on this information, would you advise a single firm (one company) in this industry to increase its price? Why or why not? Refer to the two demand curves to illustrate your answer. Q all cell phones Q one company s phones a. b. If there were only one phone company and no comtition, would your advice be different?

9 12. Assume that two countries, Holt and imondale, are considering international trade. Holt can produce 30 cars or 30 bushels of corn or any combination as shown by the roduction ossibilities Curve shown below. imondale can produce 20 cars or 40 bushels of corn as shown by the C below. ANWER ON THE LINE BELOW, NOT IMMEIATELY AFTER THE QUETION 30 cars 20 cars a. Where does Holt have absolute advantage? Comparative advantage? b. Where does imondale have absolute advantage? Comparative advantage? c. Using the concept of Opportunity Cost, explain why the two countries might decide to scialize and trade. d. What terms of trade (How many cars for how much corn) would benefit both countries? Why? CAR Holt C imondale C CORN (bushels)

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