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The supply of a good is a function of price and the demand for the good. 67) All else con

The supply of a good is a function of price and the demand for the good.

67) All else constant, an increase in the price of a good will cause the quantity supplied to increase.

68) An increase in the price of fuel and fertilizer used for corn would cause farmers to increase corn production in an effort to make up for lost profits.

69) Assume the supply function for good X can be written as

Qs = -100 + 27Px - 5Py - 1.8W

where Px = the price of X,

Py = the price of good Y, and

W = Wage index for workers in industry X.

This equation implies that X and Y are substitutes in production.

70) Assume the supply function for good X can be written as

Qs = -100 + 27Px - 5Py - 1.8W

where Px = the price of X,

Py = the price of good Y, and

W = Wage index for workers in industry X.

This equation implies that X and Y are complements in production.

71) When the supply of a good increases, the quantity supplied at each price is increasing as well.

72) When price is greater than the market equilibrium price, a shortage is created.

73) When market price is higher than the equilibrium price, a surplus is created. This will put downward pressure on price, causing quantity demanded to increase and quantity supplied to decrease until equilibrium is reestablished.

74) Assume the market for cell phone service is initially in equilibrium. An increase in supply would cause a surplus at the initial equilibrium price. The market adjustment would then involve a decrease in price which would in turn cause quantity demanded to increase and quantity supplied to decrease until equilibrium is reestablished.

75) Assume the market for used single-family homes is initially in equilibrium. All else constant, an increase in home foreclosures would cause equilibrium price and quantity to decrease.

Dec 07 2019 Read more Less More

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