Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 7TY
To determine
(a)
To show the effect of change in prices of raw material on the
To determine
(b)
To show the effect of change in prices of raw material on the demand for the substitute good.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Exercise 3. Tablets and laptops are substitutes. Due to manufacturer related issues, there is a deep shortage of tablet-specific parts. What would you expect to happen to the market (prices, supply, demand, quantity sold) shortly after the parts shortage in for each of the following products:
Tablets?
Laptops?
You can answer each point above with a labeled graph or explain in words, taking into account the differences between a change in the demand (curve) and a change in quantity demanded.
What happens to the quantity of smartphones supplied and the supply of smartphones if the
price of a smartphone
rises?
Draw a supply curve of smartphones. Label it.
Use any prices and quantities you wish but make your supply curve obey the law of supply.
Then draw an arrow to indicate what happens to the quantity of smartphones supplied when
the price of a smartphone rises.
A rise in the price of a smartphone
OA. does not change; does not change
OB. increases; increases
OC. does not change; increases
incroscoe dinge not channe
the quantity supplied and
supply.
500
450-
400-
350-
300-
250
200
150
100-
Price (dollars per smartphone)
50-
0-
0
Quantity (millions of smartphones per ye
Illustrate the effect on the equilibrium price and quantity using supply and demand curves. Be sure to label everything. Use the 4 step process.
a) The effect of an increase in the price of lumber on the market for newly constructed homes
b) The effect of a decrease in the price of chicken on the market for beef (assume they are substitutes)
c) The effect of an increase in income on the market for ramen noodles (assume they are inferior goods)
Chapter 4 Solutions
Microeconomics: Principles & Policy
Knowledge Booster
Similar questions
- Suppose that the table on the right shows the quantity demanded of UGG boots at five different prices in 2014 and in 2015. Which of the following variables could cause the quantity demanded of UGG boots to change as indicated from 2014 to 2015? (Check all that apply.) A. An increase in the price of UGG boots B. A decrease in the price of a substitute good C. A decrease in the number of buyers D. The expectation that UGG boots will rise in price Price $160 170 180 190 200 Quantity Demanded 2014 5000 4500 4000 3500 3000 Quantity Demanded 2015 4000 3500 3000 2500 2000arrow_forwardThe demand and supply schedules for gum are in the table. Price Quantity demanded Quantitysupplied (cents per pack) (millions of packs a week) 20 180 60 40 140 100 60 100 140 80 60 180 Suppose that the price of gum is 70¢ a pack. Describe the situation in the gum market and explain how the price adjusts. Suppose that the price of gum is 30¢ a pack. Describe the situation in the gum market and explain how the price adjusts. Explain and show the effect of each of these events on the market for gum uThe labor wage of gum rises Decrease in the prices of substitute good of gum Advertisement on social media about new flavors of the gum introducedarrow_forwardRefer to Figure 4-1. The movement from point A to point B on the graph is caused by a. an increase in price. b. a decrease in price. c. a decrease in the price of a substitute good.arrow_forward
- Tablets and laptops are substitutes. Due to manufacturer related issues, there is a deep shortage of tablet-specific parts. What would you expect to happen to the market (prices, supply, demand, quantity sold) shortly after the parts shortage in for each of the following products: a. Tablets?b. Laptops? You can answer each point above with a labeled graph or explain in words, taking into account the differences between a change in the demand (curve) and a change in quantity demanded.arrow_forwardQuestion 1 The following table gives the daily supply and demand for mochi-ice cream at a store: Table 1 Price Quantity demanded (units) Quantity supplied (units) RM/unit 6.10 7 35 5.20 10 30 4.20 15 25 3.20 20 20 2.20 25 15 1.20 30 8 a) Determine the equilibrium price and quantity. b) Mochi-ice cream has gone viral on TikTok and hence increases the quantity demanded of mochi-ice cream by FIVE (5) units at each price, illustrate the changes on the graph. (3Marks) c) Briefly explain any TWO (2) factors that can cause the supply curve to shift leftward. d) "Surpluses drive prices up; shortages drive them down." Do you agree?arrow_forwardSuppose 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 5.00- 4.00- 3.00- 2.00- 1.00 0.00+ 0 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- 3.00- 2.00- 1.00- 0.00+ 0 Price (dollars per bag) -~ 2 4 to 6 8 10 12 14 16 Quantity (bags per month) 18 20 Q Qarrow_forward
- Use the figure below to answer the following question. $5 Price (per pound) n N 0 2 4 6 8 10 12 14 16 18 20 Quantity Supplied (thousands of bushels per week) The diagram shows three supply curves for apples. Which of the following would cause the supply of apples to shift from S₁ to $3?arrow_forwardJiffy peanut butter and Smucker's Strawberry jam are considered to be complementary goods. Definitions: substitute goods, complementary goods Show how an increase in the price of Jiffy peanut butter affects the demand for Smucker's Strawberry jam. When the price of a related good changes, this will result in In particular, when the price of Jiffy peanut butter increases, the demand curve for Smucker's Strawberry jam will shift to thearrow_forwardThe graph shows the demand for and supply of potato chips. Draw a curve that shows the effect of a new dip that increases the quantity of potato chips that people want to buy by 40 million bags per week at each price. Label the curve. Draw a point at the new equilibrium price and quantity.arrow_forward
- substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity Problem 4: Show/Draw graph(s) and movement of curve (s) (Demand/Supply) and briefly discuss. Suppose we are analyzing the market for hot chocolate. Graphically using demand and supply lines illustrate the impact each of the following would have on demand or supply. Also, show how equilibrium price and equilibrium quantity would change and discuss why for each of the following. Winter starts, and the weather turns sharply colder. a. b. The price of tea, a substitute for hot chocolate, falls. The price of cocoa beans decreases. с. 2arrow_forwardSharon's Quantity Demanded Paolo's Quantity Demanded Price (Dollars per cone) (Cones) (Cones) 16 12 8 5 4 On the following graph, plot Paolo's demand for ice cream cones using the green points (triangle symbol). Next, plot Sharon's demand for ice cream the market demand for ice cream using the purple points (di symbol). Finally, using the blue points ircle symbol). Note: Line segments will automatically connect the points. Remember to plot from left to right. Paolo's Demand Sharon's Demand Market Demand 12 16 20 24 QUANTITY (Cones) PRICE (Dollars per cone)arrow_forwardWhat 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_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning