AP Microeconomics questions?

AP Microeconomics questions?

Postby corbin89 » March 15th, 2014, 5:31 pm

A common feature of skiing is waiting in lift lines. Does waiting in lift lines imply that price is
not effectively allocating the scarce resource? If it is not, what would you recommend?

5. Use a supply and demand diagram and verbal explanations to illustrate how the following
events will affect the equilibrium price and quantity of pizza.
a. The price of tomato sauce declines.
b. The incomes of consumers rise and pizza is an inferior good.
c. The price of mozzarella cheese increases but there is an increase in the numbers of
consumers who enjoy eating pizza.
d. Consumers expect the price of pizza to decline in the immediate future.

I have those two questions. I am not sure if you should draw S' and D' or if it offsets each other. If you could explain it, the answer is not needed.
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AP Microeconomics questions?

Postby gofried » March 15th, 2014, 5:34 pm

Ugh I'm taking that class and I hate, but I can answer your questions
1- price is not effectively allocated because people are wasting a scarce resource (in this case it would be time).
5a- draw two supply curves, one denand and show that the supply curve is shifting right. As there is an increased supply, but demand stays the same, there is a loss in price.
5b- not sure, but if it is inferior the price would decrease.
5c- pizza and mozzarella cheese are complements so both are dependent on the other. If the demand for pizza increases, the demand for mozzarella cheese increases (show an increase in demand=rise of price)
5d- not 100% sure, but price would decrease.

Oh and my teacher says for the ap exam we have to label both supply and demand curves on the same graph.
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