Ch 5

c. Explain how the location of each curve graphed in question 7b would be altered if (1) total fixed cost had been $100

1. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is ( )

Law of Supply: Price and quantity has a direct relation, when price increases, quantity also increases. When the price of oranges increases, farmers

C. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise

Concerning the demand for inputs x and y used in production of a final product (N) , it is commonly stated that the price elasticity of demand for input x is directly correlated and dependent

2.) Which curve(s) change and based on the lists in the text of what causes demand and supply to shift what are the causes of theses shifts? D1 changed moving leftward indicating a decrease in demand due to a technological change: a technological setback causes a decrease. This causes price to go down as well as the demand is lower.

____11.Refer to Table 4-1. If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded

Understanding the fundamental concepts of economics allows us to analyze laws that have a direct bearing on the economy. These laws and theories are essentially the backbone of how economics is used and studied. The law of demand can be expressed by stating that as long as all other factors remain constant, as prices rise, the quantity of demand for that product falls. Conversely, as the price falls, the quantity of demand for that product rises (Colander, 2006, p 91). Price is the tool used that controls how much consumers want based on how much they demand. At any given price a certain quantity of a product is demanded by consumers. As the price decreases, the quantity of the products demanded will increase. This indicates that more individuals demand the good or service as the price is lowered. This can be illustrated using the demand curve. The demand curve is a downward sloping line that illustrates the inversely related relationship of price and quantity demanded.

c. Suppose the price is currently $2. Will this price result in a shortage or a surplus? How much is the shortage or

iii ) Qd and Y have a negative relationship. When the average household income is increased by 1%, the quantity demanded will be decreased by 0.03%.

Figure 3 shows that a decrease in supply would cause the decrease in quantity of bananas (Q0 „_ Q1) to outweigh the increase in price of bananas (P0 „_ P1).

equilibrium price to rise and the equilibrium quantity to fall, rise, or stay the same.

A change in demand means that the amount consumers are willing and able to buy changes at each and every price. This affects your supply demands. When demand is high the price becomes low and vice/versa.

case of two linked products, demand on one good depends directly on the price of the

A good is in joint supply with another good when one good is supplied for two different purposes. For instance, oil are supported for by product like petroleum and Vaseline health product. A cow may give both leather and beef. When two or more goods are produced together, so that a change in supply of one good will necessarily change the supply of the other goods with which it is in joint supply. Figure 3, shows that an increase in demand for oil lead an increase in both price and quantity bought and sold of petroleum More oil production will lead, as a by-product to greater supply of Vaseline. In Figure 4,This is shown in a shift to the right in the supply curve for leather. The price of leather will then fall and quantity demanded, bought and sold will increase.