In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?
A) The demand curve shifts to the right.
B) The supply curve shifts to the left.
C) The quantity demanded and the quantity supplied increase.
D) The supply curve shifts to the right.
D
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Suppose that we observe that wages are falling while output is increasing. Holding the demand for output constant, what might cause this to happen?
What will be an ideal response?
Suppose an industry trade group has convinced legislators that a price floor should be used so that producer surplus is maximized in the market for milk. The group argues that such a policy would save the "family farm." Assuming a downward-sloping linear demand curve and a horizontal long-run supply curve, determine the resulting price, output and social welfare from such a policy. Compare this
result to the competitive equilibrium. What will be an ideal response?