Question 1

Given the demand equation $$Q_d = 100 - 20P$$ and the supply equation $$Q_s = 10 + 40P$$, what is the equilibrium price for eggs in this market?

Accepted Answer

$$P = 1.50$$

Question 2

At the equilibrium price found in the previous question, what is the equilibrium quantity of eggs (in millions of dozens) traded in the market?

Accepted Answer

$$Q = 70$$

Question 3

If the price of eggs is set at $$2.00$$ per dozen, what is the resulting surplus or shortage in the market?

Accepted Answer

There is a surplus of $$40$$ million dozens of eggs.

Question 4

Using the demand equation $$Q_d = 100 - 20P$$, what is the quantity demanded when the price is $$0.50$$ per dozen?

Accepted Answer

$$Q_d = 90$$

Question 5

Using the supply equation $$Q_s = 10 + 40P$$, what is the quantity supplied when the price is $$1.00$$ per dozen?

Accepted Answer

$$Q_s = 50$$

Question 6

Suppose the government imposes a price ceiling of $$1.00$$ per dozen eggs. What is the likely outcome in the market?

Accepted Answer

There will be a shortage of eggs.

Question 7

If the price of eggs increases from $$1.00 to$$ $$2.00$$ per dozen, what happens to the quantity demanded and supplied?

Accepted Answer

Quantity demanded decreases, quantity supplied increases.

Question 8

Which of the following best describes the slope of the demand curve for eggs in this market?

Accepted Answer

The demand curve is downward sloping, indicating an inverse relationship between price and quantity demanded.

Question 9

If a new health study increases the popularity of eggs, which of the following would most likely occur in the market for eggs?

Accepted Answer

The demand curve shifts to the right, increasing both equilibrium price and quantity.

Question 10

Suppose the cost of chicken feed rises, making it more expensive to produce eggs. What is the likely effect on the supply curve and equilibrium price?

Accepted Answer

The supply curve shifts to the left, raising the equilibrium price.

Question 11

If the government sets a minimum price (price floor) of $$2.50$$ per dozen eggs, what will be the market outcome?

Accepted Answer

There will be a surplus of eggs.

Question 12

Calculate the price elasticity of demand when the price increases from $$1.00 to$$ $$1.50$$ per dozen. Use the midpoint formula: $$E_d = \frac{(Q_2$ - Q_1$)}{(Q_2$ + Q_1$)/2} \div \frac{(P_2$ - P_1$)}{(P_2$ + P_1$)/2}$$, where $$Q_1$$ and $$Q_2$$ are quantities demanded at $$P_1$$ and $$P_2$$ respectively.

Accepted Answer

Elasticity is approximately $$-0.86$$

Question 13

If the supply of eggs becomes perfectly elastic, what would the supply curve look like?

Accepted Answer

A horizontal line at the market price.

Question 14

Suppose a disease reduces the number of laying hens, decreasing the supply of eggs. If demand remains unchanged, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price rises, equilibrium quantity falls.

Question 15

If the government provides a subsidy to egg producers, how will this affect the supply curve and market equilibrium?

Accepted Answer

The supply curve shifts to the right, lowering the equilibrium price and increasing equilibrium quantity.

Question 16

If the price of eggs is below the equilibrium price, what will happen in the market?

Accepted Answer

There will be a shortage, causing the price to rise.

Question 17

If the demand for eggs is given by $$Q_d = 100 - 20P$$, what is the maximum price at which any eggs will be demanded?

Accepted Answer

$$P = 5.00$$

Question 18

If the supply for eggs is given by $$Q_s = 10 + 40P$$, what is the minimum price at which any eggs will be supplied?

Accepted Answer

$$P = -0.25$$

Question 19

Suppose the government wants to ensure that at least $$90$$ million dozens of eggs are supplied each year. What price per dozen must they guarantee to producers, according to the supply equation $$Q_s = 10 + 40P$$?

Accepted Answer

$$P = 2.00$$

Question 20

If the price of eggs is $$0.50$$ per dozen, what is the market outcome?

Accepted Answer

There is a shortage, as quantity demanded exceeds quantity supplied.

Market for Eggs: Demand and Supply Analysis

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