Provide some examples of markets in which you participated, or will participate in, today. How often were you a buyer/demander? How often were you the seller/supplier? How would a change in price have affected your choices?
Provide some examples of markets that don’t use currency to pay for goods and services.
Explain how looking for someone to marry is like a market. How is a marriage market similar to a labor market?
If the average price of gasoline is $3.25 per gallon in your town, and gasoline is a perfectly competitive market, explain what might happen and why in your town if the price of gas dropped to $0.50 overnight? What if it jumped up to $10 per gallon overnight?
Movie stars such as Salma Hayek, Samuel L. Jackson, Dwayne Johnson, and Jennifer Lawrence are paid millions of dollars per movie, which can take as much as six months of full-time work for an actor, while doctors and nurses earn considerably less over the same time period. Briefly explain why.
Higher average incomes increase the demand for preventative dental visits. Explain why this will lead the quantity supplied of dental visits to increase, but supply will not increase.
Suppose the supply of green tea increases; why is it that equilibrium price and equilibrium quantity move in opposite directions?
You are the coordinator of a nonprofit that distributes donated items to three local homeless shelters. What is the most efficient way to allocate your supplies to meet demand at different locations? Which of these best represent a planned approach and which best represent a market approach?
Divide the donations evenly among the three shelters.
Ask shelters to submit their requests, and decide what to send where based on their answers.
Offer each shelter a virtual “budget” and have them bid on different items.
You purchased a ticket to the musical Hamilton through a verified reseller for $457.00. When your ticket arrives, you see the face value printed on it is $259.00. Based on this transaction, is the face value price being charged by the show’s producers above, below, or equal to the equilibrium price? How do you know?
Consider the following data from the market demand and supply for apartments.
| Rent | Quantity demanded | Quantity supplied |
|---|---|---|
| $2,000 | 5,000 | 23,000 |
| $1,800 | 8,000 | 20,000 |
| $1,600 | 11,000 | 17,000 |
| $1,400 | 14,000 | 14,000 |
| $1,200 | 17,000 | 11,000 |
| $1,000 | 20,000 | 8,000 |
The average monthly rent for apartments is currently $1,200. At this price, how many apartments will be rented in this market? Is the market currently in equilibrium, experiencing a shortage, or experiencing a surplus? What do you expect to happen to the average rent? What is the equilibrium rent and quantity in the market?
When you arrive at the gas station, there is a line of cars wrapped around the block waiting for gas, so you go to the gas station down the road, only to find another line of cars! You get in line and end up waiting over an hour just to get to the pump and then are told that they’ve run out of gas. Is this market in equilibrium? Why or why not?
When British regulators were forced to suspend the license of a flu vaccine plant in Liverpool operated by the Chiron Corporation due to concerns over bacterial contamination, the number of flu vaccines available in the U.S. market decreased by 48 million doses. This was nearly half of the total supply of vaccines in the market. Use a supply and demand diagram to illustrate the impact of this event on the market for flu vaccines in the United States. What impact will this have on the equilibrium price and equilibrium quantity in the U.S. vaccine market?
In each of the following examples, determine how supply or demand shift and how the equilibrium price and quantity change.
Smartphones: Microchips used in smartphones have become more powerful and less costly to produce.
ALS medical research funds: The ALS ice bucket challenge goes viral, leading to more awareness around the benefits and needs of ALS research.
According to a 2016 article in the Wall Street Journal, “After years of relative equilibrium, the job market for nurses is heating up in many markets, driving up wages and sign-on bonuses for the nation’s fifth-largest occupation.” Many nurses who previously delayed their retirement due to the 2008 recession had begun to retire, resulting in a retirement wave that caused nurses to exit the workforce in greater numbers than new nurses were entering. At the same time, demand for nurses had increased due to the additional health care coverage associated with job growth over the previous decade since the recession and the Affordable Care Act.
Draw a demand and supply graph illustrating these developments in the market for nurses.
Based on your diagram, forecast what will happen to the equilibrium wage for nurses as a result of the shift(s)? Is this consistent with what we actually observed?
Briefly discuss whether this problem provides enough information to determine whether the equilibrium quantity of nurses increased or decreased.
Source: Melanie Evans, “Nurses Are Again in Demand,” Wall Street Journal, November 7, 2016, https://www.wsj.com/articles/nurses-are-again-in-demand-1478514622.
Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following events.
The market for steel in the United States: Fuel efficiency regulations have reduced the use of steel in automobile production and increased the use of lighter materials such as aluminum AND import restrictions limit the amount of steel that can be imported into the United States.
The market for international airline tickets: Incomes decline due to a recession AND Norwegian Airlines adds more U.S. cities to its list of international flight destinations.
In each of the following scenarios, explain the changes in either supply or demand that would result. If the initial equilibrium price were yet to change, indicate whether a surplus or a shortage would result. Given this, what do you expect will subsequently happen to the price of the good?
In the market for paper: New advances in recycling technology reduce the cost of producing paper made from recycled materials.
In the market for lightbulbs: Recently General Electric, one of the largest suppliers of light bulbs, decided to discontinue producing light bulbs.
In the market for Las Vegas hotels: A heat wave in Las Vegas causes tourists to cancel their hotel room reservations and vacation elsewhere.
For each of the following observations, determine whether supply, demand, or both shifted and how.
Over the last decade, the price of hybrid electric vehicles decreased, while the number of hybrid vehicles sold increased.
During winter, the number of daily air routes between Denver and Aspen, Colorado, increases, as does the price of a ticket.
From January through April in the United States, personal certified public accountants (CPAs) see a dramatic increase in their number of billable hours, but the average hourly rate of a CPA remains the same.