Economics Homework Two Answers - Student Three

Seth P.

1. The supply of a good, and the demand for that good, determine both the price and quantity at which the good is sold.

Correct.

2. With a price demand curve for a particular good of P=$30-Q, where P is the price and Q is the quantity. And with the price supply curve of P=$6+Q. The price the good would be sold at would be $18 with a quantity of 12.

Correct again!

3.When the supply of a good or service increases, such as increasing the number of oil wells, the market price of oil goes down, because there is more quantity than demand. There is more to go around so people don't have to pay as much for it. When the demand for a good or service increases, such as more people driving cars that need gasoline (refined oil), the market price of oil goes up, because there is more demand than there is supply.

Good analysis, except the wording is slightly imprecise. There is not "more quantity than demand," as demand is always there at some price. There is "more quantity than demand at the original price. Ditto for the second half of the answer. But otherwise excellent.

4.Grocery stores lower the price of their fruit (such as grapes) when they have an oversupply of ripened fruit so people will buy more, and free up space in the store. Then the store can buy more stuff. Also if the fruit rots the store doesn't get as much of a profit because they didn't sell all the fruit. After the grocery store lowers its price people rush to buy it because they like cheap fruit.

Excellent again, but space is not the problem here. Most grocery stores have enough space for an oversupply of fruit. The problem is that the fruit will rot if it does not sell soon, as you say.

5.(A) Based on the data, the New York Yankees built 600 “obstructed view” seats and makes $2800 from the sale of these tickets at each game. (B)If the city of New York passed a law for a maximum price of $2 per “obstructed view” seat, yes the seats would sell out under this law. Probably people would have to wait in line to buy these tickets. I would oppose such a law because it would make more trouble than it would fix. They are trying to make it so more people could afford the tickets, but they would just be making long lines.

600 times $5 = $3000. The $2800 figure is unexplained and seems wrong. Perhaps you were calculating a profit of some sort. (Minus 1). The second half of the answer is excellent, and is a candidate for a model answer.

6.The saying “time is money” means don't waste your time. Spend it doing something profitable.

Right.

7.Waiting lists develop in countries (like Canada and England) where the government prohibits anyone from charging more than fixed prices for medical services, assuming that these fixed prices are lower than what the prices would be under supply and demand in the free market, because the demand is greater then the supply. More people would be able to afford medical treatments, but the doctors wouldn't make as much money so they wouldn't do as many of the treatments so waiting lists would develop. Also people wouldn't want to be doctors because it wouldn't pay as much as it did before the law was passed.

Superb, could use as a model.

8.When the Tyndale Bible was first made, the demand for it was so massive that the supply couldn't keep up so the price for the Bibles was a lot of money. The government didn't want the Bibles sold so they kept buying up copies to try to keep them out of the hands of the public. All the money the government was spending to try to keep them out of the public's hand was going to the people publishing the Bibles. They used that money to buy more and better printing presses. This raised the supply exponentially. The supply came closer to the demand so the price went down. More people could afford it. Finally the king gave in to the demand and made it legal. Even more copies were made.

Excellent, could use this as a model!

69/70 plus 40/40, for a superb score of 109/110. Excellent answers.--Andy Schlafly 10:06, 20 September 2009 (EDT)