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04 Equilibrium

The document is a self-study list for microeconomics focusing on equilibrium, detailing various scenarios affecting supply and demand in different markets such as paint, oil, beef, and chocolate ice cream. It includes tasks for analyzing the impact of events on equilibrium price and quantity, as well as the determinants influencing demand and supply. Additionally, it prompts the creation of diagrams to illustrate these economic concepts.

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gabriel.kuc04
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128 views2 pages

04 Equilibrium

The document is a self-study list for microeconomics focusing on equilibrium, detailing various scenarios affecting supply and demand in different markets such as paint, oil, beef, and chocolate ice cream. It includes tasks for analyzing the impact of events on equilibrium price and quantity, as well as the determinants influencing demand and supply. Additionally, it prompts the creation of diagrams to illustrate these economic concepts.

Uploaded by

gabriel.kuc04
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Microeconomics: self-study list

04 - Equilibrium
1. An economist discovers the facts listed below while analysing the paint market. Your task is to state
whether these changes will affect supply or demand and in which direction. What will happen with the price
and the quantity of equilibrium? Present such changes on the diagram, using supply and demand graphs and
marking the equilibrium change.
a. There have recently been some essential cost-saving inventions in paint manufacturing.
b. Paint lasts longer, so property owners must only repaint it sometimes.
c. Because of severe hailstorms, many people need to repaint now.
d. The hailstorms damaged several paint factories, forcing them to close for several months.
2. Many changes are affecting the oil market. Predict how each of the following events will affect the
equilibrium price and quantity in the oil market. Identify how the event will affect each case's supply and
demand. Create a sketch of the equilibrium diagram for every point.
a. Cars are becoming more fuel-efficient and, therefore, get more miles to the gallon.
b. The winter is freezing.
c. A significant discovery of new oil is made off the coast of Norway.
d. The economies of some powerful oil-using nations, like Japan, slow down.
e. War in the Middle East disrupts oil-pumping schedules.
f. Landlords install additional insulation in buildings.
g. The price of solar energy has fallen dramatically.
h. Chemical companies invent a new, popular kind of plastic made from oil.
3. Name four determinants influencing demand and four influencing supply in the case of veal. Describe how
the situation (equilibrium) would change due to changes in these determinants.
4. How would you expect the market for cadmium to react if one of the leading producers declared
bankruptcy? What could follow if another producer announced buying a bankrupt competitor's market
stocks two days later and declared maintaining current production quotas?
5. What would be the influence of the declaration of OPEC countries to lower production quotas on the market
for orange juice? Sketch possible connections and describe (using a graph) the whole situation.
6. Name five markets for each point below, which the following events might influence. Using the diagrams,
explain probable shifts in equilibrium prices and quantities in those markets.
a. The price of steel increases.
b. The price of sugar decreases.
c. More children are born.
d. Government declares VAT tax decrease.
e. There is a prediction that the speculation bubble of cryptocurrencies will soon burst.
7. List six reasons that could occur separately for the following events.
a. The price of furniture increased.
b. Books became more expensive.
c. The price of sugar decreased.
d. The price of microchips increased.
e. Carrots became more expensive in Poland.
f. The price of Coca-Cola increased.
8. Make a prognosis of future changes in the electricity market in Poland. Begin with the production process
analysis and identify core factors influencing this market.
9. Belarus closed the borders for the imports of Polish meat. Illustrate on the equilibrium diagram how this will
influence the market for beef in Poland and the market for beef in Belarus.

Compiled for microeconomics courses of Introduction to Microeconomics and Microeconomics at the


Wroclaw University of Economics and Business by Mikołaj Klimczak
Microeconomics: self-study list
04 - Equilibrium
10. Assume that the sugar cane, rum, and whiskey markets are in equilibrium. Assume further that Hurricane
Marilyn destroys much of the Jamaican sugar cane crop. Sugar cane is a principal ingredient in rum, but it is
not an ingredient in whiskey. Analyse the effect of the hurricane on the markets for each of the three goods.
Explain using graphs.
11. The European drought has made grain, and therefore feed, quite expensive. Many farmers cannot feed their
cattle and have sold much of their herd for slaughter.
a. What will this event's immediate effect be on the equilibrium price and quantity of beef? Illustrate
using a supply and demand diagram.
b. Chicken and beef are substitute goods. Illustrate the effect that the slaughter of the cattle herds will
have on the equilibrium price and quantity of chicken.
12. Why might a movie theatre charge a lower admission price for the first show on weekday afternoons than
for a weeknight or weekend show?
13. Play this simulation: https://www.branchtrack.com/projects/evad42sx/.
14. In December, the price of Christmas trees rises, and the number of trees sold also rises. Is this a violation of
the law of demand?
15. A survey indicated that chocolate is Americans' favourite ice cream flavour. For each following, show the
possible effects on demand, supply, or both and the equilibrium price and quantity of chocolate ice cream.
a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in
their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice
cream.
b. A new American Medical Association report reveals that chocolate has significant health benefits.
c. The discovery of cheaper synthetic vanilla flavouring lowers the price of vanilla ice cream.
d. New technology for mixing and freezing ice cream lowers manufacturers' costs of producing chocolate
ice cream.
16. Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the
equilibrium quantity of each of the following events.
a. The market for newspapers in your town
i. The salaries of journalists go up.
ii. There is a big news event in your town.
b. The market for Legia Warszawa T-shirts
i. Legia Warszawa "drops" from the Ekstraklasa to I Liga (from the top Polish professional league for
men's association football teams to men's second professional association football division of the
Polish league system).
ii. The price of cotton increases.
c. The market for bagels
i. People realise how fattening bagels are.
ii. People have less time to make themselves a cooked breakfast.
d. The market economics textbooks
i. Your professor makes one of the textbooks required reading for all students.
ii. The use of synthetic paper lowers printing costs for textbooks.

Compiled for microeconomics courses of Introduction to Microeconomics and Microeconomics at the


Wroclaw University of Economics and Business by Mikołaj Klimczak

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