HW After Jul11Cl 1 
FIN599 Y: Homework after July 11th Class
1) How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts? Use supply and demand to verify your answers.
a. Supply decreases and demand is constant.
Prices increase, quantity decreases
b. Demand decreases and supply is constant.
Prices decrease, quantity decreases
c. Supply increases and demand is constant. prices decrease, quantity increases
d. Demand increases and supply increases.
Prices indeterminate, quantity increases
e. Demand increases and supply is constant.
Prices increase, quantity increases
f. Supply increases and demand decreases.
Prices decrease, quantity indeterminate
g. Demand increases and supply decreases.
Prices increase, quantity indeterminate
h. Demand decreases and supply decreases.
Quantity decreases, supply indeterminate
2) Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below.
a. Fill in the table below for the missing values.
Filled below
b. Which buyer demands the least at a price of $5? The most at a price of $7?
Price Per candy at $5 the demand is least for Dex and the price per candy at $7 is Tex.
c. Which buyer’s quantity demanded increases the most when the price is lowered from $7 to $6?
Tex demand increases when price is lowered from $7 to $6 which is 4 candys
d. Which direction would the market demand curve shift if Tex withdrew from the market? What if Dex doubled his purchases at each possible price?
If Tex withdrew from the market, there would be less demand at every price level. This implies that the demand schedule would shift to the left. If Dex doubled his purchases at every price level, this would increase demand.
1) How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts? Use supply and demand to verify your answers.
a. Supply decreases and demand is constant.
Prices increase, quantity decreases
b. Demand decreases and supply is constant.
Prices decrease, quantity decreases
c. Supply increases and demand is constant. prices decrease, quantity increases
d. Demand increases and supply increases.
Prices indeterminate, quantity increases
e. Demand increases and supply is constant.
Prices increase, quantity increases
f. Supply increases and demand decreases.
Prices decrease, quantity indeterminate
g. Demand increases and supply decreases.
Prices increase, quantity indeterminate
h. Demand decreases and supply decreases.
Quantity decreases, supply indeterminate
2) Suppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below.
a. Fill in the table below for the missing values.
Filled below
b. Which buyer demands the least at a price of $5? The most at a price of $7?
Price Per candy at $5 the demand is least for Dex and the price per candy at $7 is Tex.
c. Which buyer’s quantity demanded increases the most when the price is lowered from $7 to $6?
Tex demand increases when price is lowered from $7 to $6 which is 4 candys
d. Which direction would the market demand curve shift if Tex withdrew from the market? What if Dex doubled his purchases at each possible price?
If Tex withdrew from the market, there would be less demand at every price level. This implies that the demand schedule would shift to the left. If Dex doubled his purchases at every price level, this would increase demand.