Here are the questions, many of them can be answered in simple words.
Hint: One possible answer is “neither one”.
Consider the Output Demand Curve P = 100 – Q and the Output Supply Curve P = Q.
What is the value the household places on the first unit of output?
What is the value the household places on the second unit of output?
What is the value the household places on two units of output?
What is the maximum amount the household will pay for the first unit of output?
What is the maximum amount the household will pay for the second unit of output?
If the price of each unit of output is $98.50, how many units of output will the household purchase?
What is the minimum amount the firm will accept for the first unit of output?
What is the maximum amount the firm will accept for the first unit of output?
What is the minimum amount the firm will accept for the second unit of output?
What is the cost to produce the first unit of output?
What is the cost to produce the second unit of output?
What is the equilibrium quantity demanded of output?
What is the equilibrium quantity supplied of output?
What is the equilibrium price of a unit of output?
What is the total value the household places on the equilibrium amount of output?
What are the households’ total expenditures on the equilibrium amount of output?
What is the firms’ total revenue from the sale of the equilibrium amount of output?
What is the firms’ total cost of production for the equilibrium amount of output?
Consider the new Demand Curve P = 200 – Q.
Does this increase the quantity demanded?
Does this increase demand?
Does this increase supply?
Does this increase the quantity supplied?
Consider the new supply curve P = 100 + Q.
Does this increase the quantity supplied?
Does this increase supply?
Does this increase demand?
Does this increase the quantity demanded?
Does a price floor that is above the equilibrium price increase the quantity demanded?
Does a price ceiling that is below the equilibrium increase the quantity demanded?
Does a decrease in supply increase or decrease consumer surplus?
Does an increase in demand increase or decrease consumer surplus?
What pricing policy will cause a shortage of output?
What pricing policy will cause a surplus of output?
Sample Solution
