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MICROECONOMICS self-study Exercise list: equilibrium Key concepts 1. Demand, quantity demanded. 7. Supply schedule, supply curve. 2. Demand schedule, demand curve. 8. Supply function. 3. Demand function. 9. Influence of the price on the quantity supplied, 4. Influence of the price on the quantity demanded, movement along a supply curve, the supply law movement along a demand curve, the demand law. 10. Non-price determinants (factors) of supply, the shift 5. Non-price determinants (factors) of demand, the of a whole supply curve. shift of a whole demand curve. 11. Market equilibrium, equilibrium point, equilibrium 6. Supply, quantity supplied. quantity, equilibrium price. Exercises What will be the possible reaction of the demand: (a) for winter shoes, if Chinese meteorologists announce very low temperatures during this winter in Poland; what will possibly follow if English meteorologists confirm their colleagues' prognosis; what will happen next, when after very hot autumn comes ground frost and snow precipitation? (b) for tea, if the price of coffee drops? (c) for deep-sea fish, if a famous oceanologist declares fish poisonous in some part of the world due to the water contamination; what will possibly be the reaction on the freshwater fish market. (d) for train travels, if the time of the travel decreases? (e) for cars, if the price of train tickets increases? (f) for electricity, if the average temperature in Poland in summer rises by 5 c? 2. What could be the cause of the decreasing demand for the cameras? Name three reasons. 3. Name four markets, that could be influenced on the side of the demand by the increased price of toothpaste (assume that the demand for toothpaste has standard shape). 4. What will be the possible reaction of the supply: (a) of refrigerators, if the newly introduced law bans utilization of freon in the production process? (b) of pork, if every cow receives subsidy two times higher than every pig bred in Polish farms? (c) of fish if production quotas declared by the EU rise? (d) of wheat in the situation of the discovery of new, cheap and healthy fertilizer? 5. Name four determinants influencing demand and four influencing supply in the case of veal. Draw corresponding shifts of above-mentioned functions. 6. How would you expect the market for cadmium to react if one of the leading producers declared bankruptcy: what could follow if two days later other producer announced buying all market stocks of bankrupted competitor and declared maintaining of current production quotas? 7. 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 graph) the whole situation. 8. Name five markets that will possibly be influenced by the increasing price of stainless steel. Explain, using a graph, probable shifts in equilibrium prices and quantities on those markets. 9. What could be the reason for the increase in the price of furniture? Name six examples. 10. Make a prognosis of future changes in the electricity market in Poland. Begin with the analysis of the production process and follow with the identification of core factors influencing this market