Question

1. Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50.

2. If a good is not produced, then there is no demand for it, explain why or why not?

3. The quantity of a good that consumers demand depends only on the price of the good, explain why or why not?

4. Explain why the equilibrium price is called the market clearing price.

5. Suppose a market were currently at equilibrium. A rightward shift of the demand curve would cause?

Answer 1

If a good is not produced then there is no demand for it”- the statement is false

cubbose the demand for a particular Product can be enhessed Q = 100 When palo, Q = 100 - 10 Hunce total amout spent on this good will be= (PxQ) = (10 X 10) = $100 a 100 - 5 when p=20, Q = 1 Huce the total amont spurt on this good will be (xa): 120 x ) = $ 100 When P= 50 , Q = 10 = 2 Huce the total amout spent on this good will be s Scanned with (PxQ) (PXQ) = (50X2) = $100 yox3 +10 CamScanner

Consumer’s demand for a particular good or commodity is independent of the supply of the good. For example consumers may be willing to pay a price lower than the price which will cover the cost of production of the good. In this case, even if there is demand for the goods, suppliers will not supply the good. Or if there is some natural disasters which destroys the supply of a particular good, then even if there is demand for the good, but suppliers will not be able to supply the good.

The quantity of a good that consumers demand depends only on the price of the good- the statement is false.

Quantity demanded of a particular good or commodity depends on the endogenous variable I.e the price of the good and also on many exogenous variables such as, income level of the consumers, price of its substitutes and complements etc.

The equilibrium price is called the market clearing price, because at this price, the demand curve and the supply curve of a particular good or commodity intersects with each other and there is no excess demand or excess supply in the market, and the market clears.

A rightward shift of the demand curve from D1 to D2 will increase the equilibrium price of the good from P1 to P2 and the equilibrium quantity of the good will also increase from Q1 to Q2.

supply Scanned with CamScanner Q1 Q2