Chapter 4: Q. b (page 80)
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.
Price would rise and quantity fall.
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The following table depicts the quantity demanded and quantity supplied of studio apartments in a small college town.
What are the market price and equilibrium quantity of apartments in this town? If this town imposes a rent control of $650 per month, how many studio apartments will be rented?
Consider Figure 4-1.The current demand and
supply curves are D₁ and S₁,at which the equilib
rium price and quantity areP,and Q₁.If firms
adopt an improved technique for producing this
good,which curve shifts,and in which direction
does it shift?What happens to the market clearing
price and to the equilibrium quantity?
The table below illustrates the demand and supply
schedules for seats on air flights between two cities:
What are the market price and equilibrium quantity in this market? Now suppose that federal
authorities limit the number of flights between the two cities to ensure that no more than 1,200 passengers can be flown. Evaluate the effects of this quota if price adjusts. (Hint: What price per
flight are the 1,200 passengers willing to pay?)
Understand the rationing function of prices
Evaluate the effects of changes in demand and supply on the market price and equilibrium quantity
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