Can you complete questions 1-4 please. The notes are on the page for better understanding. Many salaried employees are given Cost of Living Adjustments, which automatically raise theirsalaries in order to keep up with inflation. That type of pay increase won't affect demand. But whenconsumer income rises faster than inflation, we can observe a change in demand.A change in the price of a substitute or complementary good. If a price change convincesconsumers to buy a substitute, demand decreases. If a price change gets consumers buying more ofa complementary good, demand increases.2.3. A change in consumer tastes. What consumers like and don't like influences what they buy. If onegood or service becomes more “in style," demand for it will increase.4. A change in the number of demanders. If the number of demanders changes, the number ofpeople who can (and will) consumer a given item will also change.5. A change in expectations. If consumers expect any of the above changes to occur, they will adjusttheir purchasing patterns accordingly. If consumers expect higher income in the future, for example,they'll spend more now in anticipation of having more money. If they expect lower prices in thefuture, they'll demand less now, postponing their purchases (and actually decreasing prices throughtheir diminished demand, in an economic example of a self-fulfilling prophecy.)These factors explain the shape of the demand curve for a normal good. We can summarize the incomeeffect as follows: As a good becomes less expensive, more people are willing to buy it because more peoplecan afford to buy it. And we can explain the substitution effect like this: As a good becomes more expensive,more people will buy a substitute good instead.2.07 CATEGORIZATIONOne of these things is not like the other... In this exercise, you'll see groups of phrases or concepts thatare somehow related. In each group, one item has been included that does not belong. In each problem, crossout the one that does not belong and then write a brief explanation of your reasoning.The candidates:Your explanation:• Ross OttoThe group consists of individuals who dealt with the"water boiler" situation at the 2008 World Scholar's Cupin Seoul.Ex:Chris Yetman• Dean-SehafferDaniel Berdichevsky• price drops• consumers make more money• consumers convince their friends1.to consume• consumers decide not to consumeany morethe price of a substitute goodincreases• the price of a complementarygood increases2.• the number of consumersincreases• consumer income increaseschange in consumer preference• change in price3.change in season• change in the number ofconsumersECONOMICS WORKBOOKPAGE 43 OF 158DEMIDEC © 2008change in the price of a substitutechange in the price of acomplementchange in price4.change in consumer income

Change in the quantity demanded differs from the change in demand. Change in the quantity demanded…

• price drops • consumers make more money • consumers convince their friends 1. to consume • consumers decide not to consume any more the price of a substitute good increases • the price of a complementary good increases • the number of consumers 2. increases • consumer income increases

• price drops • consumers make more money • consumers convince their friends 1. to consume • consumers decide not to consume any more the price of a substitute good increases • the price of a complementary good increases • the number of consumers 2. increases • consumer income increases

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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T/F There is a direct relationship between the price of a product and it's supply.
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