Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
Chapter 4, Problem 6TY
To determine
(a)
To draw: the diagram for effect of rise in cost of production on regular cell phones.
To determine
(b)
To draw: the diagram for the effect of fall in the supply of regular cell phones on the market of smartphones.
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Suppose Jermaine and Tim are the only people in the market.
The curve DJ is Jermaine's demand curve and the curve DT is Tim's demand curve.
Draw the market demand curve and label it.
(If you plot any points to help you draw the curve, you must erase the points before
submitting the Problem Set).
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DT
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Consider a market for Ice Cream an inferior good in Pakistan. For each of the given events, identify which of the determinants of the demand or supply are affected. Also indicate whether demand or supply increase or decreases. Then draw a diagram to show the effect on the price and quantity of Ice Cream and solve all the subparts:
News reports claim that the consumption of Ice Cream is good for the health of coronavirus patients.
There has been a decline in wages of all employees in Pakistan due to the third wave of coronavirus.
People in Pakistan decide to have more children.
Students of NED University develop new automated machinery for the production of Ice Cream.
There has been a decrease in people’s income due to COVID-19 crisis.
i
News reports claim that the consumption of Ice Cream is good for the health of coronavirus patients.
identify which of the determinants of the demand or supply are affected. Also indicate whether demand or supply increase or decreases…
Consider two markets: the market for cat food and the market for dog food. The initial equilibrium for
both markets is the same, the equilibrium price is $4.50, and the equilibrium quantity is 31.0. When
the price is $8.75, the quantity supplied of cat food is 75.0 and the quantity supplied of dog food is
105.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula,
calculate the elasticity of supply for dog food. Please round to two decimal places.
Chapter 4 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
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- What are the potential effects in the market for automobiles if consumers experience a decrease in their income. a) draw a supply/demand graph of the automobile market. b)indicate starting equilibrium price and equilibrium quantity. c) analyze graphically the effect of the change given above on equilibrium price and equilibrium quantity in the automobile market.arrow_forwardConsider two markets: the market for cat food and the market for dog food. The initial equilibrium for both markets is the same, the equilibrium price is $3.50, and the equilibrium quantity is 31.0. When the price is $10.75, the quantity supplied of cat food is 75.0 and the quantity supplied of dog food is 103.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for dog food. Please round to two decimal places.arrow_forwardConsider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium for both markets is the same, the equilibrium price is $5.50, and the equilibrium quantity is 37.0. When the price is $8.75, the quantity supplied of coffee is 69.0 and the quantity supplied of hot cocoa is 101.0101.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for hot cocoa. Please round to two decimal places.arrow_forward
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- Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following scenarios. The market for the iPhones Scenario 1: A new Samsung cellphone is released at a lower cost than the iPhone. Scenario 2: There is an increase in the price of iPhone accessories.arrow_forwardUsing the numerical values above, draw a correctly labeled graph of the market for gadgets and show each of the following. The equilibrium price The equilibrium quantity )At a price of $8 per unit, will there be a surplus or a shortage in the market? Explain. ) Assume gadgets now become more popular. On your graph in part (a), show the effect of the increase in gadgets' popularity on the equilibrium price and quantity of gadgets. d) Assume instead there is an increase in the price of tin, a major input in producing gadgets. What will be the effect of an increase in the price of tin on the market for gadgets? e) If both changes in part (c) and part (d) occurred simultaneously, will the equilibrium quantity of gadgets increase, decrease, remain unchanged, or be indeterminate? Explain.arrow_forwardPRICE (Dollars per cup) Suppose that Brian and Crystal are the only suppliers of iced lattes in some hypothetical market. Their monthly supply schedules are given by the following table: Price (Dollars per cup) Brian's Quantity Supplied Crystal's Quantity Supplied (Cups) (Cups) 1 0 3 2 4 6 3 6 8 4 7 10 5 8 11 On the following graph, plot Brian's supply of iced lattes using the green points (triangle symbol). Next, plot Crystal's supply of iced lattes using the purple points (diamond symbol). Finally, plot the market supply of iced lattes using the orange points (square symbol). Note: Line segments will automatically connect the points. Remember to plot from left to right. 5 0 0 4 8 12 16 20 24 QUANTITY (Cups) Brian's Supply Crystal's Supply --- Market Supplyarrow_forward
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