Section+6.2

1.) What conditions lead to a surplus? When quantity supplied exceeds quantity demanded at a given price, economists call this a surplus. If a certain product is unpopular, people won't buy it. 2.)What is an example of a search cost? Calling different store and driving to different places is an example of a search cost 3.) Explain how the equilibrium price and quantity sold of eggs will change in the following cases. Remember that they need not move in the same direction. a.)An outbreak of food poisoning is traced to eggs. Demand will go down which means that prices will do down too. b.)Scientists breed a new chicken that lays twice as many eggs each week. Supply will go up and price will go down c.)A popular talk show host convinces to eat an egg a day. Demand and price will go up. 4.)What will happen to suppliers in a market if there is a surplus of the good they sell, but no supplier can afford to lower prices? 5.)The graph at the right shows the effects of a demand shift on a particular market. a.)Has demand increased or decreased? Explain. Demand has increased because the line moved to the right b.)What are the original equilibrium price and quantity sold? The original price is $20.00 and the original quantity sold is 150 c.) What are the new equilibrium price and quantity sold? The new price is $25.00 and the new quantity sold is 180 d.)A new tax raises the cost of production. How does the supply curve react? e.)Give a market price and quantity sold that might be a new equilibrium point after this cost increase