EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 4RQ
To determine
To explain: The “Water-diamond Paradox” with the help of Ricardo’s concept of diminishing returns and by using Marshall’s model of supply and demand.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
true or false - explain in short
be supported with an economic model.
If the demand for and supply of a product both increases, the equilibrium quantity of the product must also increase.
If the demand for a product decreases and the supply of the product increases, the equilibrium price of the product may increase or decrease, depending on whether supply or demand has shifted more.
Assume that there is a fixed supply in the market. A higher price will result from a change in demand brought about by a rise in income.
Assume that, in the market for iron, all of the supply
comes from iron mining firms, which own mines that
contain limited quantities of iron. Most of the demand
comes from steel manufacturers. Suppose that a new
economic report predicts that world economic growth
will greatly exceed previous projections, causing the
price of iron to double in a year. What effect does this
have upon the current market for iron? Select 2 correct
answer(s)
Question options:
Supply shifts left.
Supply shifts right.
Demand shifts left.
Demand shifts right.
SELECT 2 ANSWERS PLEASE!
A feature of goods and service markets is that they consider the different prices and quantities that will be demanded (consumers) or supplied (producers). Centrally planned economies (like the former USSR) did not have a price mechanism; instead, they used fictitious “shadow prices.” Begin by carefully explaining the role of supply, demand, and equilibrium for a commodity in real market situations. Explain what the equilibrium price and quantity mean? Why a lack of market derived price distorts the economy and makes it less efficient. Consider impact of price misalignment in terms of social surplus and economic deadweight
Chapter 1 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 1.2 - Prob. 1MQCh. 1.2 - Prob. 2MQCh. 1.3 - Prob. 1TTACh. 1.3 - Prob. 2TTACh. 1.4 - Prob. 1TTACh. 1.4 - Prob. 2TTACh. 1.4 - Prob. 1MQCh. 1.4 - Prob. 2MQCh. 1.4 - Prob. 1.1MQCh. 1.4 - Prob. 1.2MQ
Ch. 1.5 - Prob. 1TTACh. 1.5 - Prob. 2TTACh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQCh. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3PCh. 1 - Prob. 1.4PCh. 1 - Prob. 1.5PCh. 1 - Prob. 1.6PCh. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Prob. 1.10P
Knowledge Booster
Similar questions
- A key skill in economics is the ability to use the theory of demand and supply to analyze specific markets. In this assignment you get a chance to demonstrate your ability to analyze the effects of several “shocks” to the market for coffee. Answer all parts of each of the scenario below. Suppose that, as part of an international trade agreement, the Malaysia government reduces the tariff on imported coffee. Will this affect the supply or demand for coffee? Why? Which determinant of demand or supply is being affected?arrow_forwardThe supply curve of some good is vertical. What will be the effects of a fall in demand for it? explain When two people exchange a good for money, we know that they both benefit. If so, why are economists generally uninterested in which of these people receives more of the gains from the exchange? explainarrow_forwardConsider the information in the file named Green Paradox. Concentrate on the scenario called Green Paradox Case 3. This is also not a very realistic case because it assumes that the price of oil will remain the same regardless of demand conditions. But it adds some insight to the issue. Group 1 countries reduce their demand for oil by 60 units through aggressive conservation policies as well investments in renewable sources of energy. They hope the global consumption and production of oil will decreases by the same amount. After this policy, the world equilibrium price of oil equals dollars and the equilibrium quantity of oil transacted in the market changes to be consuming consuming units. At this price, Group 1 countries will units of oil and Group 2 countries will be units of oil. So, Group 1 countries were hoping to reduce global consumption of oil by 60 units. The global consumption was reduced by units. However, pay attention to what happened to the consumption of oil in these…arrow_forward
- Draw a model: Consider the market for corn. Suppose that right now, the equilibrium price is considered “too low” by farmers (i.e. suppliers) in order to make a living. These farmers go to their state representatives and convince them to enact a price floor that is above the equilibrium price. Depict this situation graphically. Is there a shortage or a surplus (or does nothing happen)? Now, conceptually, describe how we know with certainty, that consumers are harmed by this policy. Then, describe conceptually how farmers may be harmed or may benefit from this policy. Graphically depict how we know that consumers are harmed while farmers may be better or worse off (ambiguous). If we were to consider the “total surplus” of consumers and farmers, can we say with certainty whether this economy is better or worse off from the price floor?arrow_forwardSince 2019, the price of lithium in China has been falling (and it is predicted to continue falling through 2020). Assume nothing else is happening (the only thing changing is the price). As the price falls, demand for lithium in China falls True or false?arrow_forwardImagine you are the owner of a natural gas company. You can either extract as much of the resource as fast as possible or delay extraction until a future time. Projections indicate that the price of natural gas is expected to fall in the future. What would you do in the present? a. Sell as much natural gas as possible now and less in the future—reflected by a rightward shift of the current supply curve in the future. B. Sell as much natural gas as possible now and less in the future—reflected by a movement down the current supply curve.C. Sell as much natural gas as possible now and less in the future—reflected by a movement up the current supply curve.D. Sell as little natural gas as possible in the present and delay extraction until the future—reflected by a leftward shift of the current supply curve in the future.arrow_forward
- why rational theory is meant as top-down approach (deductive) and why prospect/descriptive theory is meant as bottom-up approach (inductive)? Anyone can explain this in a comprehensive way? I want to know why rational theory is being described as top-down approach and why prospect theory is being described as bottom-up approach specifically. Don't post your answer as describing what is deductive and inductive. I want to know why and how rational theory is top-down approach and how prospect theory is bottom-up approach! please answer in the context of rational theory and prospect theoryarrow_forwardAt a unit price of $340, the quantity demanded of a certain commodity is 80 pounds. If the unit price increases to $560, the quantity demanded decreases by 22 pounds. Find the demand equation (assuming it is linear) where p is the unit price and x is the quantity demanded for this commodity in pounds. p= At what price are no consumers willing to buy this commodity? According to the above model, how many pounds of this commodity would consumers take if it was free?arrow_forwardNeed help with supply and demand homework questions a) In the 1964 movie, Goldfinger, James Bond takes on the notorious gold smuggler and jeweller Auric Goldfinger. Goldfinger’s evil plan involves destroying the United States of America’s biggest stock of gold at Fort Knox, hence making Goldfinger wealthier. According to supply and demand, why does Goldfinger’s plan make sense? Explain, using a diagram. b) A drought destroys many coffee plants. How does this affect the market for coffee? Explain using a diagramarrow_forward
- Demand and Supply model In the notes and lessons, we saw that quantity demanded and quantity supplied may be related by the recurrence relations Pn+1-Pn =α (Dn - Pn), Dn+1-Dn =β (Pn - Dn), where Pn is the level production after n time intervals, Dn is the quantity demanded by the consumer and α and β are proportionality constants. Suppose α=β=k. Which of the following gives the best description of the behaviour of the quantity demanded and level of production when k=2? A. The level of production oscillates with a decreasing amplitude. The quantity demanded also oscillates with a decreasing amplitude. The level of production and quantity demanded diverge from each other as the number time steps n goes to infinity. B. The level of production oscillates with a decreasing amplitude. The quantity demanded also oscillates with a decreasing amplitude. The level of production and quantity demanded reach equilibrium as the number time steps n goes to infinity. C. The level of…arrow_forwardConsider Snackistan, a hypothetical country that produces only burritos. In 2019, a burrito is priced at $1.00. Complete the first row of the table with the quantity of burritos that can be bought with $900. Hint: In this problem, assume it is not possible to buy a fraction of a burrito, and always round down to the nearest whole burrito. For example, if your calculations result in 1.5 burritos, the answer should be 1 burrito. uppose the government of Snackistan cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 40% by 2020. Assuming monetary neutrality holds, complete the second row of the table with the new price of a burrito and the new quantity of burritos that can be bought with $900 in 2020. The impact of the government's decision to raise revenue by printing money on the value of money is known as the ________arrow_forwardWhy general equilibrium is not viable for Alfred Marshal’s theory of value?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education