ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 4, Problem 3.4PA
To determine

The reason the firm increases the quantity supplied when the price of the good increases.

Concept Introduction:

Law of supply states that as the price of the good, increases the quantity supplied of the good increases and vice-versa, other things remaining same.

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Price ($/cup) 3.5 3 88 2.5 2 1.5 1 0.5 0 10 20 Original Supply New Supply New Demand Original Demand 30 40 50 60 70 80 90 Quantity (cups/hour) The figure above refers to the market for coffee. What might cause shift from the original supply curve to the new supply curve? Check all that apply. An increase in the price of tea (a substitute for coffee). An expectation that coffee prices will fall in the future. A decrease in the price of coffee beans. A storm in that wipes out a large part of the coffee crop. A new technology that reduces the cost of making coffee.
2.2. Use a diagram to illustrate what will happen to the equilibrium price and quantity of a product if the demand for the product increases. Also mention three factors that can cause an increase in demand. (10)
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