PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 3, Problem 7P
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Relation between increasing insurance and automobiles.
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The table below shows two demand schedules for a given style of men’s shoe—that is, how many pairs per month will be demanded at various prices at a men’s clothing store in Seattle called Stromnord.
Price
D1 Quantity Demanded
D2 Quantity Demanded
$85
53
13
80
60
15
75
68
18
70
77
22
65
87
27
Suppose that Stromnord has exactly 70 pairs of this style of shoe in inventory at the start of the month of July and will not receive any more pairs of this style until at least August 1. Instructions: Enter your answers as whole numbers.a. If demand is D1, what is the lowest price that Stromnord can charge so that it will not run out of this model of shoe in the month of July?
What if demand is D2?
b. If the price of shoes is set at $85 for both July and August and demand will be D2 in July and D1 in August, how many pairs of shoes should Stromnord order if it wants to end the month of August with exactly zero pairs of shoes in its inventory?
What if the…
Consider the following: If the price per unit of good A is P175 quantity purchased is valued at 5,250 units and quantity supplied equals 2,500 units. If price changes by P1, quantity demanded changes by 4 units for consumer demand and quantity supplied changes by 2 units.
Show supporting calculations.
2. Determine the price and quantity at equilibrium, using algebraic solution.
If the price per unit of good A is P175 quantity purchased is valued at 5,250 units and quantity supplied equals 2,500 units. If price changes by P1, quantity demanded changes by 4 units for consumer demand and quantity supplied changes by 2 units.
Determine the demand and supply functions.
Determine the price and quantity at equilibrium, using algebraic solution.
Graph demand and supply curves on one set of axes and highlight the following: price-intercepts of demand and supply curves, quantity-intercepts of demand and supply curves, and the equilibrium point. (Make sure to LABEL your graph accordingly.)
Chapter 3 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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- The table below shows two demand schedules for a given style of men's shoe- that is, how many pairs per month will be demanded at various prices at a men's clothing store in Seattle called Stromnord. price D1 Quantity Demanded D2 Quantity Demanded $ 75 53 13 70 60 15 65 68 18 60 77 22 55 87 27 Suppose that Stromnord has exactly 65 pairs of this style of shoe in inventory at the satrt of the month of July and will not receive any more pairs of this style until at least August 1. Instructions: Enter your answers as whole numbers 1). If demand is D1 what is the lowest price that Stromnord can charge so that it will not run out of this model of shoe in the month of July? What if demand is D2? 2) If the price of shoes is set at $ 75 for both July and August and demand will be D2 in July and D1 in August, how many pairs of shoes should Stormnord order if it wants to end the month of August with exactly zero pairs of shoes in its inventory? What if the price is set at $ 55…arrow_forwardExhibit 8- Suppose that in a recent market period, the following relationship existed between the price of tablet devices and the quantity supplied and quantity demanded. Price Quantity Demanded Quantity Supplied $330 100 million 40 million $340 90 million 60 million $350 80 million 80 million $360 70 million 100 million $370 60 million 120 million Suppose that in a later market period, the quantities supplied in the Exhibit 8 are unchanged. The amount demanded, however, has increased by 30 million at each price. Is this an increase or a decrease in demand? What is the new…arrow_forwardUsing demand and supply analysis, graphically illustrate how the equilibrium price and quantity will change under the two following scenarios. Be certain to properly label your graphs. a) Market for biogas: Over the past year, the number of houses in one country using bio gas for heating increases while the number of companies producing biogas decreases. b) Market for instant noodle (an “inferior” good): Over the past year, the average income in one country rose by 5% while the union of instant noodle company leaders managed to gain large wage increases for their workers.arrow_forward
- Assume that demand for a commodity is represented by the equation P = 10 − .2Qd and supply by the equation P = 2 + .2Qs, where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price. Using the equilibrium condition Qs = Qd, solve the equations to determine equilibrium price. Now determine equilibrium quantity.arrow_forwardIf the demand function for a commodity is given by the equation p2 + 4q = 1200 and the supply function is given by the equation 700 − p2 + 10q = 0, find the equilibrium quantity and equilibrium price. (Round your answers to two decimal places.)arrow_forwardConsider the following: If the price per unit of good A is P175 quantity purchased is valued at 5,250 units and quantity supplied equals 2,500 units. If price changes by P1, quantity demanded changes by 4 units for consumer demand and quantity supplied changes by 2 units. Show supporting calculations. 1.) Determine the demand and supply functions.arrow_forward
- Consider the following: If the price per unit of good A is P175 quantity purchased is valued at 5,250 units and quantity supplied equals 2,500 units. If price changes by P1, quantity demanded changes by 4 units for consumer demand and quantity supplied changes by 2 units. Graph demand and supply curves on one set of axes and highlight the following: price intercepts of demand and supply curves, quantity-intercepts of demand and supply curves, and the equilibrium point. (Make sure to LABEL your graph accordingly.)arrow_forwardSuppose we increase the overall number of doctors in the U.S. in all fields and specialties of medical practice by equal percentages, which would shift the supply curves in all the respective medical practice markets. Suppose we were to analyze two separate medical practice markets: Plastic Surgery Cardiology Which markets' price would be most impacted by this increase in the supply of doctors? Which markets' quantity would be most impacted by this increase in the supply of doctors?arrow_forwardUsing the supply and demand functions below, derive the demand and supply curves if Y=$55,000 and pc=$13. What is the equilibrium price and quantity of coffee? Part 2 The demand function for coffee is Q=8.5−p+0.01Y, where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars. The coffee supply function is Q=9.6+0.5p−0.2pc, where pc is the price of cocoa in dollars per pound. Part 3 The equilibrium price of coffee is p=$enter your response here per pound and the equilibrium quantity is Q=enter your response here millions of pounds per year. (Enter your responses rounded to two decimal places.)arrow_forward
- The quantity demanded of the commodity in the market is 25 units when the selling price per unit is P12. Derive the demand equation given that because of the decrease in price to P8 per units, the quantity demanded increased to 60 units.arrow_forwardName a normal good, an inferior good, a set of substitute goods, a set of complements that are used in your household daily. For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded if the price of the same normal good decreases. For the inferior good, draw and interpret a graph showing the demand curve and a shift in the curve if your income increases. For anyone good from the set of substitutes, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the substitute…arrow_forwardUsing the supply and demand functions below, derive the demand and supply curves if Y=$55,000 and pc=$9. What is the equilibrium price and quantity of coffee? Part 2 The demand function for coffee is Q=8.5−p+0.01Y, where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars. The coffee supply function is Q=9.6+0.5p−0.2pc, where pc is the price of cocoa in dollars per pound.arrow_forward
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