Principles Of Microeconomics
7th Edition
ISBN: 9781260111088
Author: Robert H. Frank, Ben Bernanke, Kate Antonovics, Ori Heffetz
Publisher: McGraw-Hill Education
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Chapter 3, Problem 10P
To determine
The change in
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The market for Sony's Playstation5 game console has changed from 2021 to 2023. With restrictions from the Covid-19 pandemic ending people are finding other entertainment options available such as concerts, movies, and travel. Additionally, the microchip shortage is beginning to lessen, the custom-made AMD Zen 2 chip used in the PS5 has been decreasing in cost. Identify the appropriate market conditions and draw a clear graph to illustrate the market for Sony's Playstation5 game consoles in 2023 as compared to 2021.
1. Explain which non-price determinant(s) of demand and/or supply are changing.
2. Draw a graph on a piece of paper - label all axes, lines, and equilibriums. Include all relevant information.
3. Explain what is happening in the market with regard to equilibrium price and equilibrium quantity.
Consider the market for pens. Suppose that a new educational study has proven that the practice of writing, erasing, and rewriting improves students' ability to process information, leading parents to steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen production, has increased considerably.
On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens.
(graph in photo 1)
Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 graph.
(graph in photo 2)
Compare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that wasn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens.
Use the results of your answers on…
Graphically show how each of the following shifts the supply curve. Also identify which factor of supply is being affected in each case.
d) What happens to the supply of Spices if the US government withdraws an embargo on imported Spices from Iran?
e) Wheat and Corn are substitutes in production. If the price of Corn increases, what happens to the supply of Wheat?
f) What happens to the supply of Chocolates when the number of sellers decrease?
Chapter 3 Solutions
Principles Of Microeconomics
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- Suppose that there are two companies that produce mobile phones: Brand A and Brand B. Explain how each of the following events will affect the market for Brand A phones by using supply and demand diagrams (mention the changes in equilibrium price and quantity): a) Price of Brand B phones increased. b) Brand A's factory's production capacity dropped because of a shortage in raw materials supplies. c) Brand A has developed a new technology that allows to assemble the phone's components in a cheaper way.arrow_forwardThe figure depicts the market for shoes. Suppose that a less expensive material for making shoes is developed. What effect will this event have on supply and demand in the shoe market? Demonstrate your answer graphically. Instructions: Use the tool provided "New line" to draw either a new demand or supply curve that reflects the market effect of this event. Plot only the endpoints of the line. if a less expensive material developed, the- will-. This will cause the equilibrium price to- and the equilibrium- quantity to-arrow_forwardChange in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right. Could you bring me the graph?arrow_forward
- Change in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right. Analysis: The shift in the demand curve to the right led to an increase in both the equilibrium price and quantity of fertilizer. Farmers, responding to the higher demand for their crops, needed more fertilizer to enhance crop yields. As a result, fertilizer suppliers saw an increase in demand for their products. Could you bring me the graph? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardConsider the market for pens. Suppose that increased medical concems over lead pencils have led schools to steer away from pendl use In favor of pens. Moreover, the price of ink, an important input in pen production, has increased considerably. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and SUpply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Scenario 1 10 -0- 9 Supply Demand 8 Supply Demand 10 7 3 4 QUANTITY (MIllions of pens) 5 6 MacBook Air FIV F10 F7 吕0 F3 DO0 F4 F5 PRICE (Dollars per pen)arrow_forwardConsider the market for pens. Suppose that new research has been published stating that the process of writing, erasing, and rewriting improves memorization, leading parents to avoid giving their children pens in favor of pencils. Further, the price of plastic, a major input in the pen production process, has dropped sharply. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. image 1 image 2 Compare both the Scenario 1 and Scenario 2 graphs. Notice that after completing both graphs, you can now see a difference between them that wasn't apparent before the shifts because each graph indicates different magnitudes for the supply and demand shifts in the market for pens. Use the results of your…arrow_forward
- Consider the market for pens. Suppose that the number of students who are allergic to the rubber used in pencil erasers increases, leading more students to switch from pencils to pens in school. Further, the price of ink, a major input in the pen production process, has dropped sharply. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. 0 1 1 Price 2 Quantity 2 Equilibrium Object Boenario 1 O True O False Supply G 7 QUANTITY (Millions of pens) Boenario 2 Demand Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 graph. A Scenario 1 Supply 4 S 7 QUANTITY (Milions of pens) Demand D 10 Demand 10 Supply Compare both the…arrow_forwardConsider the market for pens. Suppose that the number of students who are allergic to the rubber used in pencil erasers increases, leading more students to switch from pencils to pens in school. Further, the price of ink, a major input in the pen production process, has increased sharply. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. 10 P 2 1 D 10 9 3 2 1 0 Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario 1 graph. 0 1 2 Scenario 1 3 Scenario 2 Supply Demand Supply 5 6 QUANTITY (Millions of pens) Equilibrium Object Price Quantity Demand 7 8 9 10 -o Demand Supply Scenario 1 (?) Demand Compare both the Scenario 1…arrow_forwardConsider the market for pens. Suppose that new research has been published stating that the process of writing, erasing, and rewriting Improves memorization, leading parents to avoid giving their children pens in favor of pencils. Further, the price of plastic, a major input in the pen production process, has increased sharply. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back. to its original position, just drag it a little farther. 9 8 2 1 Scenario 1 Supply Demand 0 2 3 6 7 B 9 10 QUANTITY (Milions of pans) Demand } } Supply Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves in the same way that you did on the Scenario I graph. Scenario 2 Supply Demand Demand 9 10 QUANTITY (Millions of pens) --- Supply Compare both…arrow_forward
- Question 1 Consider a rice farmer planting two (2) types of rice, white and brown rice, concurrently in his rice field using the same resources and technology and harvesting them at the same time. Given that consumers like to mix both white and brown rice in their daily consumption, explain the effect on the white rice market when the price of brown rice increases. Support your answers with suitable white rice market diagrams. Consider a farmer that produces both white and brown rice. It is discovered that the demand for brown rice is relatively more inelastic compared to the demand for white rice. Initially the price of both white and brown rice is the same and the farmer produces the same quantity of white and brown rice. Now there is an improvement in agricultural technologies that affect both white and brown rice equally. Employ the demand and supply model to compare and contrast the effects on the equilibrium price and quantity of both white and brown rice…arrow_forwardConsider the market for pens. Suppose that the number of students with an allergy to pencil erasers increases, causing more students to switch from pencils to pens in school. Moreover, the price of ink, an important input in pen production, has dropped considerably. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and supply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. 10 1 0 2 Scenario 1 Equilibrium Object Price Quantity Supply True False Demand QUANTITY (Mons of pens) Next, complete the following graph, labeled Scenario 2, by shifting the supply and demand curves In the same way that you did on the Scenario 1 graph. Scenario 2 Supply Demand QUANTITY() '0 Demand 9 10 Scenario 1 Supply Demand (?) Supply Compare both the Scenario 1 and Scenario 2 graphs. Notice…arrow_forwardAccording to the Australian Wool Innovation, severe drought conditions in Australia contributed to the lowest level of wool production in 50 years. This record low production has driven up prices sharply in Australian wool markets. Meanwhile, the price of raw cotton increased significantly for the first time in many years. a. Illustrate this observation with one demand and supply graph for the market for Australian wool and another demand and supply graph for raw cotton. b. Make sure that your graphs clearly show (1) the initial equilibrium before the decrease in the supply of Australian wool and (2) the final equilibrium. c. Use arrows to indicate any shifts in the demand and supply curves for each market. d. Label your graphs fully and write an explanation of your work.arrow_forward
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