(1)
Supply: P = 1 + 1(QS)
Demand: P = 9 – 1(QD)
Equilibrium: QE = __________
PE = __________
S curve slopes up. People produce
more of the good when they receive a
higher price.
D curve slopes down. People buy less
of the good when they pay a higher
price.
(2)
Supply: P = 2 + 2(QS)
Demand: P = 19 – 2(QD)
Equilibrium: QE = __________
PE = __________
SOLVE FOR THE EQUILIBRIUM
PRICE
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(3) Supply: P = 2 + 0.5(QS)
Demand: P = 20 – 1(QD)
Equilibrium: QE = __________
PE = __________
If P = 10 then QS = ________,
QD = ________.
Since QS is _____________ QD
there is a(n) ______________ or
________________. Price will thus
____________.
If P = 6 then QS = ________,
= ________.
QD
Since QS is _____________ QD
there is a(n) ______________ or
________________. Price will thus
__________.
(4)
Supply: P = 1 + 1(QS)
As costs rise people supply
____________ of the good at the
same price.
Thus, the supply curve shifts
_____________, to, say: S’, S’’, or
S’’’
2
(5)
Supply: P = 10 + 2(QS)
As costs fall people supply
____________ of the good at the
same price.
Thus, the supply curve shifts
_____________, to, say: S’, S’’, or
S’’’
(6)
Demand: P = 12 - 1(QD)
As people value the good more they
buy ____________ of the good at
the same price.
Thus, the demand curve shifts
_____________, to, say: D’, D’’, or
D’’’
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(7)
Demand: P = 17 - 2(QD)
As people value the good less they
buy ____________ of the good at
the same price.
Thus, the demand curve shifts
_____________, to, say: D’, D’’, or
D
(8) The supply curve is a
________________ cost curve.
Marginal cost is the cost of producing
___________________.
Suppose marginal cost goes by the
table:
We produce more
Q MC
units whenever
1
$2
price is ____
2
$4
marginal cost.
3
$5
4
$8
If P
Equals
$4
$5
$8
4
We
produce
_ units
_
_
Therefore, the
marginal cost curve
is the _______
curve.
(9)
Suppose Marginal Cost (MC) goes by
the formula:
MC = 2 + 2(Q)
If price (P) = $6, how much will
businesses produce and sell?
Solve for Q by setting P = MC
(10)
Draw MC / supply curve
S: MC or P = 1+ (1)(QS)
(1) How does S change as the price
of the good rises?
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(11) Draw MC / supply curve
S: MC or P = 1+ (1)(QS)
Because the supply curve is the
marginal cost curve, a decrease in the
cost of production shifts the supply
curve (select the one right answer)
Left or up
Left or down
Right or up
Right or down
A decrease in marginal cost is also
referred to as an ___________ in
supply.
S
(12) The supply curve S is an original
supply curve for an arbitrary good.
The other dotted lines are
hypothetical supply curves,
representing how S might change if
the marginal cost of production
changes.
(a) Find all the hypothetical
supply curves that denote a
decrease in supply, relative to
S, and label them as S1, S2,
and S3.
(b) Find all the hypothetical
supply curves that denote an
increase in supply, relative to
S, and label them as S4, S5,
and S6.
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S
(13) To the left is a supply curve for
retail pork. Corn is an input into pork
production. How does the pork
supply curve change if corn prices
fall? Illustrate this by drawing a new
supply curve and labeling it S’. Note
that there are many different correct
forms that S’ can take.
(14)
The marginal cost of corn is
MC = 2 + (0.5)(QS)
What is the marginal cost of the
fourth unit?
How much corn will be produced if
the price is $5.25?
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(15)
S
Draw a new supply curve labeled S’
where the intercept of the supply
curve falls (becomes a lower
number).
This decrease in the supply curve
intersect illustrate a(n)
_____________ in supply.
(16)
S
Draw a new supply curve labeled S’
where the intercept of the supply
curve is unchanged but where the
slope becomes a larger number.
This increase in the supply curve
slope illustrate a(n) _____________
in supply.
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