MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 4, Problem 7TY
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).
Price (dollars per bag)
6.00
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DJ
1 2 3 4 5 6 7
Quantity (bags per month)
8
Q
6.00
5.00-
4.00-
3.00-
2.00
1.00
0.00+
Price (dollars per bag)
DT
0 1 2 3 4 5 6 7 8 9 10 11 12
Quantity (bags per month)
6.00
5.00
4.00-
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Price (dollars per bag)
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Quantity (bags per month)
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Q
Q
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.
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