Supply and Demand and Demand Curve
1. Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, the quantity demanded for each person is 9. Assuming the law of demand holds, which of the following choices is the most likely quantity demanded in the market when the price is $6? Explain and show calculations,
While the question asks of the choices given what the quantity demanded will be, there are no choices given. Based on the ratio between the numbers previously given in the answer the quantity demanded is most likely 7. This is because it is the median number between 5 and 9 when the price is the median number between 4 and 8. Ergo the quantity demanded for tickets is 7 at the price of $6.
$4 5 tickets
$6
7 tickets
$8 9 tickets
2. When economists say the quantity demanded of a product has increased, they mean the:
The quantity demanded is the amount of a product people are willing to buy at a certain price. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. If the quantity demanded has increased it means two things have occurred. First, the price has decreased, causing a higher demand for the product. Second, there is a large enough supply to keep the supplier and consumer happy.
3. Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to:
A reduction in price for computers, which are a high demand item, would cause demand to increase as well. When people get a reduction on a good that they want they are more likely to buy it. When it is on technology the demand is increased due to the fact that we live in a technological society. While it is unlikely that all major computer manufacturers would jointly lower their prices it is a nice thought.
While the question asks of the choices given what the quantity demanded will be, there are no choices given. Based on the ratio between the numbers previously given in the answer the quantity demanded is most likely 7. This is because it is the median number between 5 and 9 when the price is the median number between 4 and 8. Ergo the quantity demanded for tickets is 7 at the price of $6.
$4 5 tickets
$6
7 tickets
$8 9 tickets
2. When economists say the quantity demanded of a product has increased, they mean the:
The quantity demanded is the amount of a product people are willing to buy at a certain price. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. If the quantity demanded has increased it means two things have occurred. First, the price has decreased, causing a higher demand for the product. Second, there is a large enough supply to keep the supplier and consumer happy.
3. Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to:
A reduction in price for computers, which are a high demand item, would cause demand to increase as well. When people get a reduction on a good that they want they are more likely to buy it. When it is on technology the demand is increased due to the fact that we live in a technological society. While it is unlikely that all major computer manufacturers would jointly lower their prices it is a nice thought.