Economics Homework Two Answers - Student Two

TrishaM

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 it is a free market).

Correct.

2\. Given: P= 30-Q; P= 6+Q. So, P=P, and 30-Q = 6+Q, which equals 12. So, Q=12. Inserting this answer back into the first original equation (P= 30-Q) gives me, P=18. So, the Quantity is 12 and the Price is $18.

Correct again!

3\. When the supply of a good/service increases, the price decreases because the demand has stayed the same and its curve slopes downward. If there is more supply, then the public is not willing to pay a higher price for it. However, when the demand for something increases the price will go up because the supply has stayed the same and the public is willing to pay more to get the good/service.

Superb.

4\. If there is an oversupply of over-ripe fruit, then the demand for it goes down, because there is plenty. The downward slope of the demand curve shows this to be true since the further the supply curve is to the right (or the greater the supply), the further down the demand will have gone. Since the demand has gone down for this over-ripe fruit, the grocery store is forced to lower its price to meet the supply/demand equilibrium in order to sell all the fruit before it has gone bad.

Excellent. Upon further review, this is not precisely correct because the demand for quantity never reduces in this scenario. The demand price falls but the demand quantity increases.

5\. A) The New York Yankees built 600 obstructed-view seats and will make $3,000/game selling at $5/ticket. B) If New York city were to make it law that the seats only sell for $2, then the supply would not meet the demand and there would be a waiting line. I would oppose such a law because it restricts the free market and causes the suppliers to make too little money off the seats. Not everyone would be receiving a fair opportunity.

Good analysis.

6\. Time is money because we can use our time and exchange it for some form of payment. Anything that is exchanged in return for something else is considered to be a form of money. Thus, time is money.

I'm not sure that anything exchanged for something else "is considered to be a form of money." People would not view dog biscuits as a form of money, for example. But your first sentence is correct and right on target. Well done.

7\. Waiting lists develop in other countries because if the demand is high but the price is too low, suppliers have no incentive to produce more goods/services to meet that high demand.

Well done.

Perfect! 70/70. Congratulations!--Andy Schlafly 19:22, 18 September 2009 (EDT)