Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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Chapter 4, Problem 7DQ
To determine
To discuss: The activities of a speculator, if he/she were to buy when the price is high and sell when the price is low.
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Scenario 2: The Ministry of health publishes a study finding that coffee drinking reduces the probability of getting cancer.
How do you imagine this will affect the market for coffee? Why?
Which determinant of demand or supply is being affected? Explain.
Show graphically the changes in demand or supply.
Will this change the equilibrium price and quantity of coffee? Explain your reasoning.
in the Fall of 2020, international demand for U.S. grains grew, pushing up the prices for grains. Indeed grain prices grew nearly 50% in the last 6 months. Your task as an analyst is to analyze the changes in the market for corn.
Using a graph, depict the changes that took place in the corn market. Clearly show and explain any shifts in demand and/or supply curves. Label any shifted curves as D1 and/or S1. If the curves have not shifted, please explain why.
Clearly show the new market equilibrium. Label the new equilibrium price as P1 and equilibrium quantity as Q1
We know that a change in the price of a product causes a movement along the
demand curve. Suppose consumers believe that prices will be rising in the future.
How will that affect demand for the product in the present? Can you show this
graphically? (Please type your answer about consumer expectation's impact on demand, then upload a picture of your graph)
Chapter 4 Solutions
Microeconomics: Principles & Policy
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- Demand 1 3 4 5 6 8 10 QUANTITY (Millions of pens) 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 both the Scenario 1 and Scenario 2 graphs to complete the following table. Begin by indicating the overall change in the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate the resulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If you cannot determine the answer without knowing the magnitude of the shifts, choose Cannot determine. Change in Equilibrium Objects Equilibrium Object Scenario 1 Scenario 2 When Shift Magnitudes Are Unknown Price Quantity True…arrow_forwardThe following table shows the annual demand and supply in the market for shoes in Miami. Price (Dollars per pair of shoes) 20 40 60 80 PRICE (Dollars per pair of shoes) 120 100 20 On the following graph, plot the demand for shoes using the blue point (circle symbol). Next, plot the supply of shoes using the orange point (square symbol). Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in the market for shoes. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 0 100 0 Quantity Demanded (Pairs of shoes) 1,100 900 800 200 600 500 400 600 800 QUANTITY (Pairs of shoes) Quantity Supplied (Pairs of shoes) 200 400 500 900 1000 1,200 1200 O Demand Supply Equilibriumarrow_forwardThe price of crude oil has been increasing. The price of a good rises in two cases, when demand rises or when supply falls, or both. It has been given that there has been a growing demand for crude oil for turning into refined petroleum (increase in demand), along with a decline in its production (fall in supply). It implies that both an increase in demand and a decrease in supply is responsible for the price rise. Draw a graph to show the information.arrow_forward
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