Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 4.3, Problem 2ST
To determine
The validity of the given statement.
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In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example.
Example a. Product - Hamburgers Event - The price of steak increases
Example answer a. Demand increases - Curve shifts right - Price of substitutes
b. Gym memberships Society becomes more health conscious.
c. Golf Balls The price of golfing increases.
d. Spam (Inferior good) There is an decrease in people’s salaries.
e. Pepsi The price of Coke decreases dramatically.
f. Steak Incomes fall due to the recession
g. Hair dye Hair…
In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example.
EXAMPLE/ Product - Hamburgers Event - The price of steak increases
EXAMPLE ANSWER/ Demand increases - Curve shifts right - Price of substitutes
Rock Salt - It snows 8 inches over night
In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example.
EXAMPLE/ Product - Hamburgers Event - The price of steak increases
EXAMPLE ANSWER/ Demand increases - Curve shifts right - Price of substitutes
Salt - The price of salt doubles.
2. Sunscreen - Summer approaches.
3. Big Macs - The population in the United States increases by 20%.
4. Rock Salt - It snows 8 inches over night
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Similar questions
- In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example. EXAMPLE/ Product - Hamburgers Event - The price of steak increases Answer/ Demand increases - Curve shifts right - Price of substitutes 1. Pepsi - The price of Coke decreases dramatically. 2. Steak - Incomes fall due to the recession 3. Hair dye - Hair dye is successfully advertised in the media. 4. Computer software - The price of computers goes down.arrow_forwardSuppose you live in the United States and plan a vacation in London. You want to find the least expensive airfare ticket, so you request quotes from Independence Airline (a U.S. airline) and Queen's Airways (a U.K. airline).arrow_forwardHow does the selling price of a house depend on such factors as the square footage of the house, the number of bedrooms in the house, and perhaps others?arrow_forward
- 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)arrow_forwardSuppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?arrow_forwardstudy shows that eating a clove of garlic a day can help prevent heart disease, causing many consumers to demand more garlic. This increase in demand results in a rise in the price of garlic. Consumers, seeing that the price of garlic has gone up, reduce their demand for garlic. This causes the demand for garlic to decrease and the price of garlic to fall. Therefore, the ultimate effect of the study on the price of garlic is uncertain.”arrow_forward
- Do the equations state that good A is a normal good? Yes or no. Defend your answer.arrow_forwardAt one McDonald's restaurant, the daily demand for cheeseburgers is given by -1 = ) * 200(1+0.75p² 200 9 = 1+0.75p2 where p is the price (in dollars) for a cheeseburger, and q is the number of cheeseburgers sold by the store in a single day. 7 a.d What is the derivative of q? (do not simplify) b.4 cheeseburgers are priced at p dollars each? What is the formula for the price elasticity of demand when Using the price elasticity of demand formula from part b, how much C. Should this McDonalds charge for a cheeseburger to maximize daily revenue? Please give a one or two sentence summary on how you found this answer.arrow_forwardTrue/False? Briefly explain. Assume good x is a normal good. In terms of consumer behavior, a cash grant and a small (relative to the initial consumption of x) limited non-matching grant on good x (with the limit that is equal to the cash grant) are essentially equivalent.arrow_forward
- How can the owner of The Burger Barn determine if a one-day promotional sale on milkshakes will affect the total revenues generated by hamburger sales ?arrow_forwardSuppose you are an economist working in a watch factory operating in a competitive market. The cost is given by: CT = 200 + Q2, where Q is the level of production and CT is the Total Cost, the CMg (marginal cost) of production is 2Q. The Fixed Cost of production is $ 150. a. If the price of the watches is $ 60. How many watches must they make to maximize profit?b. What would be the level of utility?c. At what minimum price would the company make a positive output?arrow_forwardSuppose one of your friends offered the following argument: a rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply curve, which will lead to an offsetting decrease in price. Therefore, it is impossible to tell what effect an increase in demand will have on price. Do you agree with your friend? If not, what is the flaw in your friend’s reasoning?arrow_forward
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