Download APEconHW#3aFall2014

AP Economics
Homework #3
Fall 2014
Name_______________________________
Block________
This homework is due on Tuesday, September 30th at the beginning of class. Late homework will be
accepted at a cost of 10% per day until they are graded and handed back (2 days after the due date). At
that point, I will not accept your homework and you will receive a zero. Please be as neat as possible
and show all of your work. If you need more room, use the back of each sheet and indicate you are
doing so. The numbers in parentheses represent the worth of each problem.
1. Provide a graphical representation and explanation for how the following events would affect
the equilibrium price and quantity in the market for Hamburgers in Potomac, Maryland. (25)
(A) There is a decrease in the price of hamburger rolls which are always eaten with
hamburgers.
(B) Hot dog stands cut the price of hot dogs.
(C) Restaurants selling hamburgers expect the price to increase next week.
(D) Income in Potomac falls and hamburgers are an inferior good.
(E) The price of ground beef rises.
For the following multiple choice questions, circle the best answer and provide a sentence or two to
explain your result. (20)
2. Which of the following describes what will happen in the market for chicken if a salmonella
outbreak is attributed to chicken?
(A) Supply will decrease and price will increase.
(B) Supply will decrease and price will decrease.
(C) Demand will decrease and price will increase.
(D) Demand will decrease and price will decrease.
(E) Supply and demand will both decrease.
3. Which of the following will lead to an increase in the equilibrium price of product “Y”? A(n)
(A) Increase in consumer income if product “Y” is an inferior good.
(B) Increase in the price of machinery used to produce product “Y”.
(C) Technological advance in the production of good “Y”.
(D) Decrease in the price of good “X” (a substitute for good “Y”).
(E) Expectation by consumers that the price of good “Y” is going to fall.
4. Which of the following is certainly true if demand and supply increase at the same time?
(A) The equilibrium price will increase.
(B) The equilibrium price will decrease.
(C) The equilibrium quantity will increase.
(D) The equilibrium quantity will decrease.
(E) The equilibrium quantity may increase, decrease, or stay the same.
5. The market for beans is experiencing a surplus. You should predict that
(A) Price will increase, quantity demanded will fall, and the quantity supplied will increase.
(B) Price will increase, quantity demanded will rise, and the quantity supplied decrease.
(C) Price will decrease, quantity demanded will rise, and the quantity supplied will decrease.
(D) Price will decrease, quantity demanded will fall, and the quantity supplied will increase.
(E) None of the above will occur.