Chapter 4: Q. 4.1 (page 75)
Discuss the essential features of the price system
Prices are flexible, market driven and neutral.
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There are simultaneous changes in the demand for and supply of tablet devices, with the consequences being an unambiguous decrease in the equilibrium quantity of these devices but no change in the market clearing price. What changes in the demand for and supply of tablet devices could have generated these outcomes? Explain.
Explain the effects of price ceilings
Why do you think that economists seek to study prices measured in terms of dollars per unit as measured, say, by weight or by volume rather than by prices per package or per container? Explain your reasoning.
Evaluate the effects of changes in demand and supply on the market price and equilibrium quantity
If some shipping firms were to exit the market for ocean-borne shipping services, what would happen to the market clearing price and equilibrium quantity? Explain briefly.
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