Economics Homework Two Answers - Student Eleven

AllieT

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

A. Price B. Quantity

Correct!

2. P = 30- Q 6 + Q = 30 – Q P = 6 +Q 2Q = 24 Q = 12 Therefore, 30 – 12 = 18 and 6 +12 = 18

P= $ 18 Q = 12

Correct again!

3. Increasing the number of oil wells will drive the market price down. The demand for oil will be down and the larger quantities of oil will need to be sold; therefore, the sellers will lower the price.

  When there is a greater demand for oil, the price will go up. The market price will go up because there is not enough of the supply for all the demands of the people. People will be willing to pay the higher prices to satisfy their demand. 

Excellent.

4. Grocery stores lower the prices of ripened fruit because they have a low demand and they must sell their fruit before it spoils. If they lower the price, they will have demand for the fruit because people will think they are getting a “deal”. On a Supply and Demand model, they curve of both the supply and demand lines will be moved to the right. This will show a decrease in both quantity and price.

Correct, except the demand curve does not move in this situation. (Minus 1).

5. (a) I think the New York Yankees built 300 “obstructed view” bleachers. The team would make a profit of $ 2100. However, if the team built 600 “obstructed view” bleacher seats they would reach equilibrium. Then, they can make a profit off the extra 300 seats through concession stand sales.

   (b) If the maximum price for an “obstructed view” bleacher seat were set at $ 2, then the tickets would be sold out; however, the team would not be able to make a great profit. People would have to wait in line to be able to buy their ticket. I do not support such a law that would put a price control on an item. It would not be considered a “free market” and there would no be competition among different teams. The team would not be able to make a great profit and grow as a whole. 

The second half of your answer to Part (a) is correct, and your answer to part(b) is superb. The first sentence to your answer to Part (a) is misplaced because the question is asking about economics, and not testing knowledge of the news or history.

6. Free market allows competition to keep the price of goods and services down. The wealthiest people in the world do not have such control over these aspects. They cannot simply say that their money and wealth can keep the price of their items at a reasonable rate so that they poor can purchase these items. Their goal is to make a profit and to gain from their item. The free market, however, is there to help those that cannot help themselves monetarily.

Good.

7. Waiting lists are developed in countries where the government has control over how much a doctor can charge for medical services. The reason these lists are developed is because there is a high demand for medical services yet there is not a great supply of doctors to provide these services. The prices may be lower under government control, but the doctors are not able to compete amongst themselves to provide a broader range of medical services creating a greater supply to those in need. Competition drives down costs of the services by doctors deciding for themselves how much they will charge for their services. This act will allow patients to have more options on how much they want to pay the doctors and how long their wait time will be.

Good analysis.

69/70. Great work!--Andy Schlafly 12:59, 20 September 2009 (EDT)