Chapter 3, Problem 1P

Subpart (a):

To determine

Graphical illustration of changes in quantity demanded of tablet.

Explanation of Solution

Figure 1 shows the changes in quantity demanded of tablet.

In Figure 1, the vertical axis measures the price of tablet and horizontal axis measures the quantity demand for the tablet.  The upward sloping curve S0 and D0 are the supply and demand curve at price P0 and Q0 quantity. With the increased access to wireless technology and lighter weight, the demand for the tablet computer increases and at the same time it is easier and cheaper to produce as new technology that has come in online. This will reduce its price from P0 to P1. As price decreases, the quantity demanded of tablet increases from Q0 to Q1. Thus, the demand curve is shifted from D1to D2.

Economics Concept Introduction

Concept introduction:

Supply:  The term supply represent how much an seller or a market can offer.

Demand: Consumer's desire and willingness to pay a price for a specific good or service which satisfies his wants.

Supply curve: Supply curve shows the relationship between product price and quantity that a seller is willing to supply.

Demand curve: Demand curve shows the demand for goods and services varies with changes in its price.

Subpart (b):

To determine

Graphical illustration of changes in Cranberry production.

Explanation of Solution

Figure 2 shows the changes in quantity demanded of Cranberry.

In Figure 2, the vertical axis measures cranberries price per barrel and horizontal axis measures millions of barrels cranberries per year. The upward sloping curve is the supply curve and downward sloping curve is the demand curve.  The demand is decreased by even more than the supply decreases due to the changes in price.

Economics Concept Introduction

Concept introduction:

Supply:  The term supply represent how much a seller or a market can offer at the given price level during the period of time.

Demand: Consumer's desire and willingness to pay a price for a specific good or service which satisfies his wants.

Supply curve: Supply curve shows the relationship between product price and quantity that a seller is willing to supply.

Demand curve: Demand curve shows the demand for goods and services varies with changes in its price.

Subpart (c):

To determine

Graphical illustration of changes in demand of San Jose office space.

Explanation of Solution

Figure 3 shows the changes in demanded of San Jose office space.

In Figure 3, the vertical axis measures the rent of San Jose office space and horizontal axis measures the demand of office space. Downward sloping curve is the demand curve at different t rate of rate. After high tech boom, the demand and rent were high (D1999). In 2001 march, the economy face a recession. After that, the demand for San Jose office space reduces. Thus, the demand curve is shifted to backward from D1999 to D2001.in 2005 the employment level from San Jose were rising slowly and rents began to rise again. This change may shift the demand curve from D2001 to D2005.

Economics Concept Introduction

Concept introduction:

Supply:  The term supply represent how much an seller or a market can offer.

Demand: Consumer's desire and willingness to pay a price for a specific good or service which satisfies his wants.

Supply curve: Supply curve shows the relationship between product price and quantity that a seller is willing to supply.

Demand curve: Demand curve shows the demand for goods and services varies with changes in its price.

Subpart (d):

To determine

Graphical illustration of changes in demand of bread.

Explanation of Solution

Figure 4 shows the changes in demanded curve of bread.

In Figure 4, the vertical axis measures the price of bread and horizontal axis measures the quantity demanded of bread. Downward sloping curve is the demand curve of bread and upward sloping curve is the supply curve of the bread.  P1 is eth regulated price and P2 is the unregulated price. Before economic reform, the price of bread is below the equilibrium level. After the implementation of economic reform, the quantity demanded of bread fell down.

Economics Concept Introduction

Concept introduction:

Supply:  The term supply represent how much an seller or a market can offer.

Demand: Consumer's desire and willingness to pay a price for a specific good or service which satisfies his wants.

Supply curve: Supply curve shows the relationship between product price and quantity that a seller is willing to supply.

Demand curve: Demand curve shows the demand for goods and services varies with changes in its price.

Subpart (e):

To determine

Graphical illustration of changes in equilibrium.

Explanation of Solution

Figure 5 shows the changes in equilibrium point.

In Figure 5, the vertical axis of both part of figure measures the price of steel per tons and horizontal axis measure metric tons of steel. Upward sloping curve shows the supply curve of the steel and downward sloping curve is the demand curve of the steel. The part “A” of the figure shows the equilibrium without any import of steel. Decrease in import duty increases the import of steel. It shifts the supply curve to rightward. Thus, the equilibrium point is shifted (shown in part “B” of the figure). The gap between “a” and “b” is the quantity imported.

Economics Concept Introduction

Concept introduction:

Supply curve: Supply curve shows the relationship between product price and quantity that a seller is willing to supply.

Demand curve: Demand curve shows the demand for goods and services varies with changes in its price.