Chapter 4 8. Circle one of the options in cach of the following parentheses: New

Question

Chapter 4 8. Circle one of the options in cach of the following parentheses: New regulations discouraging doctors from prescribing excessive amounts of painkillers to patients go into effect at the same time that the government institutes heavy taxes on pharmaceutical companies. Given the above changes, we would expect the equilibrium price of painkillers to (increase decrease'change in an unknown direction), and the equilibrium quantity to (increase/decrease/change in an unknow direction). (1 pt) 9. (Table: Equilibrium Price, Quantity) Refer to the table. The equilibrium P and Q are: (1 pt) $10 12 14 16 18 45 40 35 30 30 35 40 45 50 A) S10 and 50 units traded. B) S12 and 35 units traded. C) $40 and 14 units traded. D) $14 and 40 units traded. 10. Scientists discover a new process for producing lab-grown beef that tastes exactly the e as regular beef, but can be produced for half the price. What happens to the sam market for cows in the short run? (1 pt) A) The supply of cows would decrease because it would become harder to make a profit selling thenm B) There would be no effect on the market for cows C) Demand for cows would decrease because no one would be willing to pay more than the lab-grown price for cattle-grown beef D) The price of cows would rise due to increased competition from the lab-grown beef

Explanation / Answer

8) there will be leftward shift in demand curve of painkillers due to new regulations that discouraging doctors from prescribing excessive amounts of painkillers. also, there will be leftward shift in the supply curve of painkillers due to heavy taxes on pharmaceutical companies. so, we would expect

the equilibirium price of painkillers to change in an unknown direction ( it depends on the magnitude of shift in curves.) and the equilibirium quantity to decrease.

9) the equilibirium price is $14 and equilibirium quantity is 40. because at this price quantity demand is equal to quantity supply.

so, correct option is D.

10) in the short run demand for cows would decrease because no one would be willing to pay more than the lab grown price for cattle grown beef.

so, correct option is C.

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