Econ Chapter 3 Activity - Courtney Vogel

53

Question 3 What effect will the following changes have on the DEMAND for coffee? (a) An increase in people's income due to economic growth (b) A fall in the price of tea (c) An increase in the price of milk and cream (d) A government health report suggesting that too much coffee is bad for your heart An increase in the price of beer (e) Note: Assume coffee is a normal good.

question 1

QUESTION 19 A decrease in demand for a good generally implies that consumers are willing to pay a higher price for each unit of the good consumers are willing to buy larger quantities of the good at each price the demand curve for the good has shifted to the right O the demand curve for the good has become steeper O the demand curve for the good has shifted to the left

Question 1 Carefully explain what is happening in the following markets.  Indicate the impact if any on demand, supply, price and quantity.  The prices of inputs for the production of Brand X handbags have increased.  Concurrently, taste and preferences has favoured this brand of handbag in the last 4 market periods. (i) Impact on Demand? (ii) Impact on Supply? (iii) Impact on Price? (iv) Impact on Quantity?

Question 1 The demand and supply curves for instant oatmeal are as follows: Qa = 100.5Pd, where Qa is the quantity of instant oatmeal packets (in million units) demanded when the price consumers pay is Pa. Qs = −2+ Ps when P, is greater than or equal to 2; Qs = 0 when Ps < 2, where Qs is the quantity of instant oatmeal (in million units) supplied when the price producers receive is Ps. Suppose the government imposes a price ceiling of $6 in the market for oatmeal. (a) What are the equilibrium price and quantity in the market without a price ceiling? (b) What is the size of the shortage in the market with the price ceiling? What is the producer surplus? (c) What is the consumer surplus? What is the total surplus/welfare? What is the deadweight loss?

Question 1 A perfume product has the following market demand and supply equations: QD = 50 - 5P Qs = 10 + 3P where P is, Qp and Qs are quantity demanded and supplied of perfume, respectively. a) What is the equilibrium price and quantity? Calculate using the arithmetic method. b) Draw demand and supply curves for prices £0, £1, £2 .. £8. c) Suppose consumers' income increases and perfume is considered as a normal good. As a result, the new demand equation is Qo = 70- 5P. Find the new equilibrium price and quantity of perfume. d) Your economist friend told you that because of the change in demand described in part (c), price elasticity of demand changed. Is your friend right? Explain. e) Use the demand equation in part (c) to compute price elasticity of demand between £4 and £5. Use the mid-point (arc) method.

Part D  E

4. Answer Exercise No. 3 on page 69. Answer only Exercise No. 4 once you have read Lesson 3, pages 71-74. Assessment 3.2 1. What does an upward-sloping supply curve mean about how sellers in a market will react to a lower price? 2. What is the difference between the supply and the quantity supplied of a product, say face shields? Explain in words and show the difference on a graph with a supply curve for face shields. 3. Will supply curves have the same exact shape in all markets? If not, how will they differ? 4. Explain and give example of at least 2 determinants of supply? 5. Explain and give example of at least 2 determinants of elasticity of supply? Instructions on how to submit student output Follow the instruction from Module 1, Lesson 1.1 (Assessment 1.1). You will submit your output together for Modules 1 and 2 Page 68of 97 Vision: A globally competitive university for science, technology, and environmentalconservation. Development of a highly competitive human resource,…

Question 1-This question has 1 part Explain, using demand and supply analysis, the impact on the market for chocolate if a famous singer is eating chocolate in her next music video and at the same time the price of sugar (which is needed to make chocolate) increases. Clearly state the effect on demand and supply and whether equilibrium price and/or quantity have increased, decreased or whether the outcome is uncertain.

1. Select the three statements that relate to the concept of supply. i. Supply is influenced by changes in demand ii. Supply refers to quantities of goods or services that can be sold at various prices during a certain period. iii. An increase in supply will result in a fall in the price of the product and an increase in the quantity exchanged iv. Supply influences consumer behaviour and buying patterns. A. i, ii, iii B. i, ii, iv C. i, iii, iv D. ii, iii, iv

10. If supply changes from S2 to S1 and demand changes from D1 to D2     (a) equilibrium price falls to $ 14.     (b) equilibrium quantity increases to 16.     (c) equilibrium price increases to $19.     (d) supply has increased. 11. if demand changed from D1 to D2 as a result of an increase in buyers' income this product is     (a) a normal good.     (b) a free good.     (c) an inferior good.     (d) a complementary good. 12. If demand for this product changed from D2 to D1 as a result of a increase in price of a related product, then these two products are     (a) complements.     (b) inferior goods.     (c) economic goods.     (d) substitutes.     (e) public goods.

QUESTION 1 A recent storm resulted in massive damage to numerous fishing boats. This made fishing difficult for the affected fishermen. As a result, the price for 1 kilogram of fish rose from $14.70 to $18.70. Which of the following statements is true? O The demand for fish will decrease. O The demand of fish will increase. O The quantity demanded of fish will increase. O The quantity demanded of fish will decrease. O The change in price is associated with the movement along the supply curve.

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. Move the supply and/or demand curves to reflect the primary effect this would have on the market for online music. You can assume that online music is a normal good. Also select the end result of equilibrium price and quantity. Equilibrium price Equilibrium quantity Price ($ per track) Quantity (number of tracks) Supply Demand

Supply and Demand: End of Chapter Problems 2. Determinants of demand Select all the factors that might increase the demand for frozen slushies. Decrease in the price of ice cream Warm weather Fall in incomes (Assume that frozen slushies are a normal good.) Decrease in the price of soft pretzels (Assume that soft pretzels and frozen slushies are generally consumed together.)