Give an example not in the text of how quantity can become indeterminate.
What will be an ideal response?
Should show a thorough understanding of how a change in both supply and demand can cause quantity to become indeterminate. For example, suppose the weather service predicts a La Niña pattern will cause heavy snowfall in major ski resort areas. As a result, the manufacturer increases the production of skis, thereby increasing supply. However, unexpectedly, the temperatures rise and melt much of the snow, and afterward, snowfall totals remain low. The demand for skis plummets. In such a situation, the increase in supply and decrease in demand will cause the price of skis to drop. However, the quantity of skis will be indeterminate. If supply increases more than demand decreases, then the equilibrium quantity will increase. If demand decreases more than supply increases, then the equilibrium quantity will decrease.
You might also like to view...
Which of the following observations about outsourcing is true for the U.S. economy?
a. The U.S. is the smallest international outsourcer in terms of dollar value. b. About 30 percent of U.S. manufacturing costs were outsourced in 2003. c. The highest percentage of outsourcing by U.S. businesses in 2003 was to other firms located in the United States. d. Imports of business services by the U.S. made up around 2.5 percent of gross domestic product in 2003.
If the price of a product is lowered from $300 to $270, and as a result the quantity demanded increases from 25 to 30 units, we know that in that range: a. demand has declined
b. demand is elastic. c. demand is unit elastic. d. demand is inelastic. e. demand is perfectly elastic.