Economics (7th Edition) (What's New in Economics)
Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 3, Problem 3.1.13PA
To determine

One-child policy.

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When a company offers a new product or service, they estimate how much of that product or service people will want at different prices. This is referred to as the product or service demand. As the price of a product or service increases, the demand usually decreases, and this drives the price down. Companies use the estimated demand to determine how much of a product or service they are willing to supply at different prices. As the price of a product or service increases, companies are willing to supply more of it because they will earn more money. If you graph the demand and the supply curves on the same xy-plane, they will sometimes intersect at the point where the price and the supply are in equilibrium. Consider the scenario below. Yaseen is a local artist who wants to increase the amount of money she earns every month by selling at-home painting kits. These kits will include a photograph of the finished painting, a link and password to Yaseen’s YouTube channel where she will…
The drug war There is a debate in the US and in Europe as to how to influence the market for drugs such as cocaine. Some argue that the answer is to reduce the supply of drugs from Colombia – which would otherwise eventually find their way onto the world markets – by giving aid to the Colombian government to fight the drug suppliers. If this is successful, it will drive up the price of cocaine on the streets. Higher prices mean that fewer people will be willing and able to buy drugs, resulting in a fall in demand. This scenario can be seen in Figure 1.13(a) where a successful anti-drug policy in Colombia would decrease supply, i.e. shift the supply curve for cocaine upwards and to the left so that there is an excess demand for cocaine at price P. This will result in a rise in the equilibrium price of cocaine from P to P1. The quantity demanded will contract along the demand curve D from Q to Q1 as price rises from P to P1. Critics of these ideas argue that programmes…
What can a marketer do to positively influence a situation in which a consumer is ready to buy but has not yet done so?
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