微观经济学---入门压轴题 全英文 john Sloman and Alison Wride --2

1.

Answers to Workshop 2

Demand and Supply

The

following

passage

refers

to

the

operation

of

a

free-market

economy.

Delete

the

words

(in

italics) which are incorrect.

In a totally free-market economy, the quantities of each type of good that are bought and sold,

and

the

amounts

of

factors

of

production

(labour,

land

and

capital)

that

are

used,

are

determined

by

the

decisions

of

individual

households

and

firms

through

the

interaction

of

demand and supply.

In

goods

markets,

households

are

demanders

and

firms

are

suppliers

.

In

labour

markets,

households are

suppliers

and firms are

demanders

.

Demand

and

supply

are

brought

into

balance

by

the

effects

of

changes

in

price.

If

supply

exceeds demand in any market (a surplus), the price will

fall

.

This will lead to

a rise in the

quantity demanded but a fall in the quantity supplied

.

If, however, demand exceeds supply

in

any

market

(a

shortage),

the

price

will

rise

.

This

will

lead

to

a

fall

in

the

quantity

demanded

and

a

rise

in

the

quantity

supplied.

In

either

case,

the

adjustment

of

price

will

ensure

that

demand

and

supply

are

brought

into

equilibrium,

with

any

shortage

or

surplus

being eliminated.

2.

How will the market demand curve for a ‘normal’ good shift (i.e.

left

,

right

or

no shift

) in each of

the following cases?

(a)

The price of a substitute good falls

.

..... .................................................. ..................................

l

eft

(b)

Population rises

................................. .................................................. ..................................

r

ight

(c)

Tastes shift away from the good ............................... .................................................. .............

l

eft

(d)

The price of a complementary good falls ....................... .................................................. ....

r

ight

(e)

The good becomes more expensive

.

.................................. ......

n

o shift

(movement along curve)

3.

4.

How

will

the

market

supply

curve

of

a

good

shift

(i.e.

left

,

right

or

no

shift

)

in

each

of

the

following cases?

(a)

Costs of producing the good fall.

.

................ .................................................. .......................

r

ight

(b)

Alternative products (in supply) become more profitable. .................. ...................................

l

eft

(c)

The price of the good rises.

.

.................... .................................................. .......................

no shift

(d)

Firms anticipate that the price of the good is about to fall.

................................. .................

r

ight

How will the following changes affect the market price of wheat flour (assuming that the market is

initially in equilibrium)? In each case, sketch what happens to the demand and/or supply curves

and, as result, what happens to the equilibrium price.

(a) People consume more bread.

(b)

The discovery of a new cheaper way of

milling flour.

P rice

Price

S

1

S

1

S

2

< br>P

2

P

1

P

1

P

2

D

2

D

1

Q

1

D

1

Quant ity

Q

2

Price

Q

1

Q

2

Quantity

Price

(c)

The prices of other grains rise.

S

1

(d)

Rice and potatoes fall in price.

S

1

P rice

Price

S

2

S

1

P