ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
14th Edition
ISBN: 9781337912396
Author: Baumol
Publisher: CENGAGE L
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Chapter 4, Problem 7DQ
To determine
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Scenario 2: The Ministry of health publishes a study finding that coffee drinking reduces the probability of getting cancer.
How do you imagine this will affect the market for coffee? Why?
Which determinant of demand or supply is being affected? Explain.
Show graphically the changes in demand or supply.
Will this change the equilibrium price and quantity of coffee? Explain your reasoning.
There has been explosive growth in the demand for the green leafy vegetable kale in recent years as consumers learned of its health benefits. The demand curve has shifted significantly rightward. However, the price of a bunch of kale in the grocery store has been fairly stable. Draw a supply and demand diagram showing the market for kale, and show how the price of kale could remain stable in the face of such an enormous growth in demand.
1.) please plot the new supply and demand curves on a diagram and label the lines properly.
2.) please also indicate the new equilibrium point at the same price as the original equilibrium and label it.
Explain why the following statement is false: “In the goods market, no buyer would be willing to pay more than the equilibrium price.”
We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically?
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ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
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