. Situation where a good with a low total value commands a low price, while a good with a high total value commands a high price. b. Situation where a good with a low total value commands a high price, while a good with a high total value commands only a low price. c. Fact that goods with high total values command high prices. d. Confusion between supply curves and demand curves. e. Fact that goods with low total values command low prices.

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Respond to the following matching statements with regard to the definition of supply. Match 1: The claim that other things being equal, the quantity supplied of a good increase when the price of that good rises. This matches the Law of Supply. Match 2: A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices. This matches the Supply curve. O Both matches are false O Match 2 is correct and Match 1 is false. O Both matches are correct. O Match 1 is correct and Match 2 is false. Next 1 Previous

3. Indicate how each of the following will affect the current supply (Increase supply or Decrease Supply) for personal computers. a) A rise in wage rates b) An increase in the number of sellers of computers c) A tax placed on the production of computers d) A subsidy placed on the production of computers

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2. Suppose that annual demand in the U.S. market for ice cream cones can be expressed as QD = 800 + .2I - 100P, where QD is the number of cones demanded in millions of cones, I equals average monthly income in dollars, and P is price in dollars per cone.  Supply can be expressed as QS = 200 + 150P (with the same units for quantity and price).   A.    Graph the demand and supply curves for ice cream cones, assuming that average monthly income is $2,000, and solve for the equilibrium price and quantity.   B.     Now assume that the average monthly income drops to $750 and supply is unchanged. Draw the new demand curve on the same graph as used in (a) above and solve for the new equilibrium price and quantity.            How would you describe the shift in demand intuitively?