Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134079271
Author: CASE
Publisher: PEARSON
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Question
Chapter 4, Problem 1.6P
Subpart (a):
To determine
To illustrate the given situation with
Subpart (b):
To determine
To illustrate the given situation with supply and demand curves.
Subpart (c):
To determine
To illustrate the given situation with supply and demand curves.
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Students have asked these similar questions
Illustrate the following with supply or demand curves:
a. In Joseph Heller's iconic novel, Catch 22, one of the characters was paid by the government to not grow
alfalfa. According to the story's narrator, "The more alfalfa he did not grow, the more money the government
gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not
produce."
b. In 2018, Dunkin' Donuts removed six sandwich options from its menu in an effort to streamline operations,
and this had a significant impact on the number of donuts it sold to customers.
c. From 2014 to 2016, median income in the United States rose by 8.5 percent, shifting the demand curve for
gasoline. During that same time period, crude oil prices fell 55 percent, shifting the supply of gasoline. At the
new equilibrium, the price of gasoline is less than it was before. (Crude oil is used to produce gasoline.)
According to a news article on bloomberg.com, the demand for coffee is increasing as "millennials' seemingly unquenchable thirst for
coffee is helping to push global demand to a record." At the same time, coffee crops in Brazil and Asia have been hampered by dry
weather and droughts. The article notes that "consumption is rising as supplies are getting tighter."
Source: Marvin G. Perez, "Coffee-Loving Millennials Push Demand to a Record," bloomberg.com, October 30, 2016.
Use a demand and supply graph of the coffee market to illustrate how the equilibrium quantity of coffee can increase as a result of these
events. Be sure that all curves on your graphs are properly labeled, that you show any shifts in those curves, and that you indicate the
initial and final equilibrium points.
1.) Using the line drawing tool, graph the effect of the growth in millennial demand for coffee by drawing a new demand curve. Label your
curve 'D₂.'
2.) Using the line drawing tool, graph the effect of dry…
As oil prices rose during 2006, the demand for alternative fuels increase. Ethanol, onealternative for fuel is made from corn. According to an article in the Wall Street Journal, theprice of tortillas, which are made from corn, also rose during 2006. “The price spike [intortillas] is part of a ripple effect from the ethanol boom”a. Draw a demand and supply graph for the corn market and use it to show the effect onthis market of an increase in the demand for ethanol. Be sure to indicate theequilibrium price and quantity before and after the increase in the demand for ethanol.b. Draw a demand and supply graph for the tortilla market and use it to show the effect onthis market of an increase in the price of corn. Once again, be sure to indicate theequilibrium price and quantity before and after the increase in the demand for ethanol.c. By 2015, the price of oil had fallen, which reduced the price of gasoline. The demandfor ethanol fell along with the price of gasoline. What impact would…
Chapter 4 Solutions
Principles of Economics (12th Edition)
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