Econ Macro (book Only)
6th Edition
ISBN: 9781337408745
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 4, Problem 8P
A
To determine
The impact on
Concept Introduction:
Demand curve: The demand curve is the graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time. The X (vertical) axis represents the price and quantity demanded in the Y (horizontal) axis.
Supply curve: The supply curve is the graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. The X (vertical) axis represents the price and quantity supplied in the Y (horizontal) axis.
B
To determine
The impact on equilibrium price and quantity of ice-cream with decrease in the price of beef.
Concept Introduction:
Demand curve: The demand curve is the graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time. The X (vertical) axis represents the price and quantity demanded in the Y (horizontal) axis.
Supply curve: The supply curve is the graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. The X (vertical) axis represents the price and quantity supplied in the Y (horizontal) axis.
C
To determine
The impact on equilibrium price and quantity of ice-cream when there are concerns about the high fat content of ice cream. Simultaneously, there is an increase in the price of sugar.
Concept Introduction:
Demand curve: The demand curve is the graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time. The X (vertical) axis represents the price and quantity demanded in the Y (horizontal) axis.
Supply curve: The supply curve is the graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. The X (vertical) axis represents the price and quantity supplied in the Y (horizontal) axis.
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Students have asked these similar questions
Question:
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.
1) News reports claim that the consumption of Ice Cream is good for the health of coronavirus patients.
2) There has been a decline in wages of all employees in Pakistan due to the third wave of coronavirus.
3) People in Pakistan decide to have more children.
4) Students of NED University develop new automated machinery for the production of Ice Cream.
5. There has been a decrease in people’s income due to COVID-19 crisis.
(1. identify which of the determinants of the demand or supply are affected. Also indicate whether demand or supply increase or decreases of each.
2. Then draw a diagram to show the effect on the price and quantity of Ice Cream of each.)
1. Understanding changes in equilibrium price and quantity
Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do
so, you must consider factors that can affect the supply of and demand for heating oil.
Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the
price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining
crude oil into home heating oil.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to the graph parameters.
(Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.)
PRICE (Dollars per barrel)
80
70
60
50
40
30
20
10
0
Market for Heating Oil
+
T
T
I
I
+
1
I…
Question 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?
Knowledge Booster
Similar questions
- Question 4 Assume new cars are normal goods. What will happen to the equilibrium price of new cars if price of gasoline falls and the price of steel used in cars falls? Quantity will rise, and the effect on price is ambiguous. Price will rise, and the effect on quantity is ambiguous. Price will fall, and the effect on quantity is ambiguous. Quantity will fall, and the effect on price is ambiguous.arrow_forward1. Market research has revealed the following information about the market for ice cream. The demand schedule can be represented by the equation Qd=480-40P, where Qd is the quantity demanded and Pis the price. The supply schedule can be represented by the equation Qs=-240+40P, where Qs is the quantity supplied and P is the price. Calculate the equilibrium price and quantity in the market for ice cream.arrow_forwardQuestion 27 Assume new cars are normal goods. What will happen to the equilibrium price of new cars if price of gasoline falls and the price of steel used in cars falls? Price will fall, and the effect on quantity is ambiguous. Quantity will rise, and the effect on price is ambiguous. Quantity will fall, and the effect on price is ambiguous. Price will rise, and the effect on quantity is ambiguous.arrow_forward
- Assume gadgets are sold in a competitive market, the equilibrium price is $6, and the equilibrium quantity is 500 units.(a) Using the numerical values above, draw a correctly labeled graph of the market for gadgets and show each of the following.(i) The equilibrium price(ii) The equilibrium quantity(b) At a price of $8 per unit, will there be a surplus or a shortage in the market? Explain.(c) 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_forward3. Understanding changes in equilibrium price and quantity Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to the graph parameters. (Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) PRICE (Dollars per barrel) 80 70 60 50 40 30 20 10 0 Market for Heating Oil + 1 1 1 I Supply…arrow_forwardExplain how the market demand curve for a ‘normal’ good will shift (i.e. left, right or no shift) in each of the following cases? What then will happen to the equilibrium price and quantity? Example: “demand curve shifts left, equilibrium price increases, equilibrium quantity decreases”. (a) The price of a substitute good falls Click or tap here to enter text. (b) The price of a complementary good rises Click or tap here to enter text. (c) The price of the good increases Click or tap here to enter text. (d) There is an increase in Income Click or tap here to enter text. (e) Taste increase for the good Click or tap here to enter text.arrow_forward
- Answer asap pleasee Suppose that demand and supply of apples are described by the following equations: P = 100 - 3Q (demand) P = 20 + Q (supply) a) Calculate the equilibrium quantity.arrow_forwardSuppose both the demand for olives and the supply of olives decline by equal amounts over some time period. Use graphical analysis to show the effect on equilibrium price and quantity. Instructions: On the graph below, use your mouse to click and drag the supply and demand curves as necessary. Price of olives Quantity of olives S₁ Oarrow_forwardAs the price of Oreos rises, (supply, demand, quantity supplied, quantity demanded) increases and (supply, demand, quantity supplied quantity demanded) decreasesarrow_forward
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