Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 4, Problem 8P
To determine
Effect on the
Concept Introduction:
Equilibrium price refers to the price where the quantity supplied of the good equals the quantity demanded of the good.
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14. 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 (Dollar per barrel)
8 28 28 2 20
80
70
60
50
40
30
20
++
0
Market for Heating Oil
1
1…
A. Keeping all other factors constant, graphically show the effects of the
following on the demand for sugar. Below each graph, indicate whether there
is an increase or decrease in demand/quantity demanded.
1. The population expects that there will be 2. The price of coffee goes up
shortage of sugar one month from now
3. The population consumes more
nutrasweet (a sugar substitute)
4. The price of sugar goes down
Chapter 3 Review
Quantity
Figure 3-1
6. Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate
a (n):
A. increase in quantity demanded.
B. decrease in quantity demanded.
C. increase in demand.
D. decrease in demand.
Price
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Similar questions
- 3. 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_forward(Figure: The Supply of Apple TV Rentals) Use Figure: The Supply of Apple TV Rentals. An increase in the price of online movie rentals would result in the change illustrated by the move from: Price of Apple TV rental 0 Price of Apple TV rental n (a) Quantity (per period) (c) Quantity (per period) Price of Apple TV rental Price of Apple TV rental. 0 (b) S₂ S₁ Quantity (per period) (d) Quantity (per period)arrow_forward7. State the Law of Demand. Discuss the relationship between Price of the good and its Quantity demanded. Over the last 10 years, price of new models of smart Phones increased by 25%. At the same time, the number of sold phones has increased from 250KD to 400KD. Does this example demonstrate that the Law of Demand is false? Explain why or why not. Use graphs.arrow_forward
- 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…arrow_forward11.An increase in demand occurs when the demand curve shifts upward and to the right. there is a leftward shift in the demand curve. quantity demanded is greater than quantity supplied. quantity supplied is greater that quantity demanded.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
- Price (dollars per pizza) S S2 Quantity (millions of pizzas per year) n the above figure, the shift in the supply curve from S to S1 reflects A) an increase in the quantity of pizza supplied. B) a decrease in the quantity of pizza supplied. C) an increase in the supply of pizza. D) a decrease in the supply of pizza. F)arrow_forward6. Shifts in supply or demand I The following graph shows the market for cereal in Detroit, where there are over a thousand stores that sell cereal at any given moment. Suppose the price of breakfast bars increases. (Assume that people regard cereal and breakfast bars as substitutes.) Show the effect of this change on the market for cereal by shifting one or both of the curves on the following graph, holding all else constant. PRICE (Dollars per box) QUANTITY (Boxes) Supply Demand Demand 0 Supplyarrow_forward1. Draw a supply and demand curve for peanut butter. The price of jelly rises significantly, what happens to the supply or demand for peanut butter? Why?arrow_forward
- 7. Suppose that in a recent market period, the following relationship existed between the price of tablet devices and the quantity supplied and the quantity demanded. Price Quantity Demanded (Millions) Quantity Supplied (Millions) $330 100 40 $340 90 60 $350 80 80 $360 70 100 $370 60 120 8. When the price of shirts emblazoned with a college logo is $20, consumers buy 150 shirts per week. When the price declines to $19, consumers purchase 200 shirts per week. Based on this information, calculate the price elasticity of demand for logo emblazed shirts.arrow_forward3. Market for hamburgers, what happens to supply and demand? 1. Price of chicken sandwiches (a substitute) increases Demand shifts to right 2. Price of French fries (a complement) decreases Demand for hamburgers shifts to the right 3. Price of hamburgers decrease Quantity demanded increases 4. Cockroaches found in multiple restaurants Demand decreases (shifts to the left)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_forward
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