Economics Homework Two Answers - Student Eight

Duncan B.

1. The supply of a good and the demand for that good determine both the price and quantity at which the good is sold (assuming a free market).

Correct.

2. P=$18, Q=12

Correct again!

3. When the supply of a good such as oil increases, the price decreases, as sellers have a greater quantity than usual to sell, and not enough people will purchase it if the price remains steady, resulting in unsold oil. If the demand increases, the price will rise, as people are willing to pay more for what there is, as there is not enough to go around.

Good explanation, may use as a model answer.

4. When a grocery store has an oversupply of fruit, they will often decrease the price, so that more people will want it and the fruit will not spoil before they can sell it, making it useless. As the price drops, the demand curve moves to the right, increasing the amount sold.

No, the demand curve itself does not move to the right, but the price moves down the stationary demand curve. (Minus 1) Otherwise good.

5.

A. They built 600 seats, as that is where the supply equals the demand.

B. People will have to wait, as the demand for the lower priced tickets exceeds the supply. I would oppose such a law, as it interferes with the free market.

Correct in part A, but incomplete as the question also asked about revenue to the team. (Minus 1). Part B is excellent.

6. You can convert your time into money by working, although time is not literally money.

Excellent.

7. Price controls on health care impose an artificial cap on a price, increasing the demand, but leaving the supply the same, Waiting lists develop, because there is insufficient supply for the demand and not all can be treated at once, Fewer people become doctors due to low pay, also.

Superb.

Honors Essay Question #8

The attempt by English authorities to suppress the copies of the Tyndale Bible, which was legal to make in Protestant Germany but illegal to produce in England, failed due to the immense demand in England for the Bibles. Many people in England wanted to purchase a Bible, but there were not enough to go around, raising the price. The captains who smuggled the Bibles to England, hidden inside crates or barrels, and the German printers who made them, reaped huge profits, and they printed even more of them in an attempt to keep up with the demand, The English confiscated many copies in seaports before they could be unloaded, burned whatever Tyndale Bibles they could find, fined, imprisoned, or confiscated the property of vendors who carried the books, but the demand for the books kept more and more copies coming into England.

The situation was in some ways similar to the drug smuggling business today; the trade is so profitable that it continues, regardless of what the government does. The market is primarily in the United States, where it is illegal to make drugs, forcing the dealers to make them in other countries where the government does not care. There are a few differences, though, a person needed only one or two Bibles as opposed to the continuous supply of drugs an addict needs, and Bibles do not hurt society.

Excellent analysis, may use as a model!

Terrific work. 68/70, plus 40/40, for a total of 108/110. Congratulations.