@ 7 100% AT&T 9:08 AM HW 1.pdf III. Supply and Demand Changes (be sure to label the axis on all of your graphs) a) Suppose that you do a national survey of Americans, asking them how they feel about American-made cars versus Japanese-made Americans' "taste" for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold b) Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your Suppose as well that you discover that cars 2 predictions for equilibrium price and sales change c) Suppose both (a and b above) of these shocks are would be your prediction for equilibrium price and sales change in the American car market? occurring simultaneously. Now what d) Suppose Congress approves a proposed "temporary worker" program and American firms find out that they workers become 'less scarce'. How would this economic shock impact the market for lettuce? are able to hire workers while paying lower wages. This happens because e) Scientific reports have shown that iceberg lettuce (much of it grown in California) show high levels of contamination from rocket fuel. California farmers use the Colorado River for irrigation of their fields and the water of the Colorado River is contaminated from production on sites used by several defense contractors. How would this economic shock impact the market for lettuce? ) Suppose both shocks (d and e above) predictions for equilibrium price and sales change? g) There are four possible ways that demand and supply These ways are listed below. For each case, draw two demand and supply graphs and show the demand change On each graph, indicate the direction of the change in P* and Q*. Finally, in each case, give your prediction for the overall net impact demand and the supply change simultaneously Simultaneous Increase in Demand and Increase in Supply Simultaneous Decrease in Demand and Decrease in Supply Simultaneous Increase in Demand and Decrease in Supply Simultaneous Decrease in Demand and Increase in Supply occur simultaneously. Now what would be your can simultaneously shift in a market on the first graph and the supply change on the second graph on P* and Q* for the market when both the IV. Price Control Price Per Bushel Quantity Demanded Quantity Supplied (dollars) 3 36,000 30,000 2,000 6 25,000 5,000 6 20,000 10,000 12 16,000 15 16,000 13,000 23,000 18 21 30,000 8,000

@ 7 100% AT&T 9:08 AM HW 1.pdf III. Supply and Demand Changes (be sure to label the axis on all of your graphs) a) Suppose that you do a national survey of Americans, asking them how they feel about American-made cars versus Japanese-made Americans' "taste" for American-made cars has decreased and the taste for Japanese- made cars has increased. Using the demand and supply model, show how this change in taste for American-made cars will impact the market for American-made cars. Give your predictions for the change in the equilibrium price and the equilibrium quantity of American-made cars bought and sold b) Suppose that you have information indicating that the price of steel (an important input of production in the auto industry) has doubled during the past few months. Show how this economic shock will influence the market for American made cars and give your Suppose as well that you discover that cars 2 predictions for equilibrium price and sales change c) Suppose both (a and b above) of these shocks are would be your prediction for equilibrium price and sales change in the American car market? occurring simultaneously. Now what d) Suppose Congress approves a proposed "temporary worker" program and American firms find out that they workers become 'less scarce'. How would this economic shock impact the market for lettuce? are able to hire workers while paying lower wages. This happens because e) Scientific reports have shown that iceberg lettuce (much of it grown in California) show high levels of contamination from rocket fuel. California farmers use the Colorado River for irrigation of their fields and the water of the Colorado River is contaminated from production on sites used by several defense contractors. How would this economic shock impact the market for lettuce? ) Suppose both shocks (d and e above) predictions for equilibrium price and sales change? g) There are four possible ways that demand and supply These ways are listed below. For each case, draw two demand and supply graphs and show the demand change On each graph, indicate the direction of the change in P* and Q. Finally, in each case, give your prediction for the overall net impact demand and the supply change simultaneously Simultaneous Increase in Demand and Increase in Supply Simultaneous Decrease in Demand and Decrease in Supply Simultaneous Increase in Demand and Decrease in Supply Simultaneous Decrease in Demand and Increase in Supply occur simultaneously. Now what would be your can simultaneously shift in a market on the first graph and the supply change on the second graph on P and Q* for the market when both the IV. Price Control Price Per Bushel Quantity Demanded Quantity Supplied (dollars) 3 36,000 30,000 2,000 6 25,000 5,000 6 20,000 10,000 12 16,000 15 16,000 13,000 23,000 18 21 30,000 8,000

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.5IP

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