The graph on the right shows the market for hamburger, which is in equilibrium. Hamburger is a normal good, and people like to eat cheese with hamburger. Beef is an input to hamburger production. Suppose that there is a decrease in business taxes. 1.) Using the line drawing tool, show the effect on the market. Properly label your new curve. 2.) Using the point drawing tool, show the new equilibrium price and quantity. Label your point 'E'. Carefully follow the instructions above, and only draw the required objects.

The graph on the right shows the market for hamburger, which is in equilibrium. Hamburger is a normal good, and people like to eat cheese with hamburger. Beef is an input to hamburger production. Suppose that there is a decrease in business taxes. 1.) Using the line drawing tool, show the effect on the market. Properly label your new curve. 2.) Using the point drawing tool, show the new equilibrium price and quantity. Label your point 'E'. Carefully follow the instructions above, and only draw the required objects.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

1. The Smith family eats both meat and potatoes on a regular basis and we need to know how the family views these goods. If the price of meats rises and the family eats more potatoes, then the two goods must be a. Substitutes b. Complements c. Inferior d. Normal 2. Which of the following is not a determinant of Supply? a. Prices of resources b. Technology and productivity c. Prices of Complements d. Producers’ expectations e. The number of producers 3. In December, both the price of Christmas trees and the quantity of trees sold rises. Is this a violation of the Law of Demand? Explain your answer 4. Explain the following statement in terms of Supply and Demand: “When a war breaks out in the Middle East, the price of gasoline rises and the price of a used Cadillac falls”.
A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Last, extend your analysis to the long run, a period of time long enough for new coffee growers to enter the market or for existing growers to exit the market. How might equilibrium price and quantity in the market for coffee be affected when enough time is allowed for a change in the number of sellers in the market?
A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Next, assume there is a new study that finds enormous health benefits to coffee consumption. Again, describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Now, extend your analysis to what might happen if both of these events (weather which damages coffee beans and positive news on the health benefits of coffee) happen…
The market for cellular phones has seen a combination of improving telecommunication technology and rising consumer incomes. Suppose you are told that the price of cellular phones decreased over the past five years. The decreasing prices of cellular phones, a normal good, implies that the magnitude of: A. he rightward shift of the demand curve is greater than that of the rightward shift of the supply curve B. The leftward shift of the demand curve is greater than that of the rightward shift of the supply curve C. The rightward shift of the demand curve is less than that of the rightward shift of the supply curve D. The rightward shift of the demand curve is less than that of the leftward shift of the supply curve
Question 1 Suppose the market demand for pizza is given by Qd = 300 - 20P and the market supply for pizza given by Qs = 20P – 100 Graph the supply and demand for pizza using $5 through $15 as the value of P. In equilibrium, how many pizzas would be sold, and at what price? What would happen if suppliers set the price of pizza at $15? Explain the market adjustment process. Suppose the price of hamburgers, a substitute for pizza, doubles. This leads to a doubling of the demand for pizza (at each price consumers demand twice as much pizza as before). Write the equation of the new market demand for pizza. Find the new equilibrium price and quantity for pizza. If the price of Pizza is $2 what is the elasticity of demand and supply for pizza? Now if the price increases to $5 calculate the demand and supply elasticities.
Suppose the market demand for shirts is given by Qd = 300 – 20P and the market supply for shirts is given by Qs = 20P – 100, where P = price (per shirt). i. Graph the supply and demand schedules for shirts between price = $5 through to $15 (increase in units of 1, i.e. 5, 6, 7…). ii. Using the equations provided, in equilibrium, how many shirts would be sold and at what price? iii. What would happen if suppliers set the price of shirts at $15? Explain the market adjustment process.
"Assume that the price of crisps rises while the equilibrium quantity falls. Explain in each of the following cases whether they are true, false or uncertain and argue with respect to the statement made: a. An increase in the price of onion rings (a substitute for potato crisps) b. A fall in the price of onion rings. c. An increase in the price of potato bread (production-side substitute for potato crisps). d. A fall in the price of potato bread.
Show, using a supply & demand graph, the effect on the equilibrium price and quantity of the good in question of the following events. Assume markets are initially in equilibrium. These are qualitative answers. An original and new market equilibrium on the graph is needed. Show that clearly. (its a graphing assignment) The market for Bread: The price of lunchmeats (a complement to bread) decreases.
can you answer these questions too: Suppose that more consumers prefer the disposable cell phone over the smart phone because the disposable cell phone is more durable than the smart phone. This latest news comes after the fact that firms that manufacture disposable cell phones have the latest technology integrated into their production facilities. What will be the market effect? Going back to question (d), suppose that the price of a disposable cell phone is now set at $11.75. How many disposable cell phones will be demanded by consumers? Whichever curve you’ve determined should be shifted, derive the new function.
Recently, the market for beef has been experiencing a major change. In general,there has been a decline in demand for beef as consumers have turned more to fish andchicken or have simply been eating less meat overall. On the other hand, there has been adramatic increase in demand for “organic” or naturally raised beef. In fact, organic beef sellsfor a substantial premium over regular beef.a. Use comparative statics analysis to analyze the short-run and long-run effects of these shifts in demand.b. Answers should include a graph
The demand side of the market for Sprite is comprised of 2 people. These people are William and Owen. P represents the price of 1 gallon of Sprite, and Qd represents the quantity demanded of Sprite in gallons. William's demand for Sprite is modeled by the equation QdW = 10 - 2P Owen's inverse demand for Sprite is modeled by the equation P = 10 - 2QdO (Part I) With this information, draw the market demand graph. Please label the graph for slope values, intercepts, kinks, etc. (Part II) The market supply is modeled by P = Qs. Let's say that the government places a subsidy of $8 (s = 8). As a result, what is the market equilibrium with this intervention of the government (Q**, PD**, and PS**)? (Part III) Please draw the market demand and market supply on a new graph and indicate/label the market equilibrium with the government intervention through a subsidy. Label the graph for slopes, subsidy, equilibrium points, etc.
Suppose the current price of a good is $125. At this price, the quantity supplied is 150 units, and the quantity demanded is 110 units. For every $1 decrease in price, the quantity supplied decreases by 5 units and the quantity demanded increases by 3 units. At the current price, the quantity demanded isless than the quantity supplied. This means that the market is currently experiencing a . In order to adjust, the market price will until the quantity demanded and quantity supplied are equal. The result is an equilibrium quantity of and an equilibrium price of .