Spring 2024 Principles of Macro Assignment 5 (Demand and Supply)

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Northwest Missouri State University *

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52150

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Economics

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Feb 20, 2024

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Principles of Macro Spring 2024 Name ___Katie Schultz ____________ Assignment #5 Assignment instructions: Read each question carefully and answer in the space provided. Please highlight your answers or use a different colored font. Submit your assignment as a Word document attachment through NW Online. Be sure to double check that your assignment is attached properly to your submission! 1. Fill in the blanks with one of the terms listed below. You will use each term once . Please give your answers in the second column of the table.  increase in demand  increase in quantity demanded  decrease in demand  decrease in quantity demanded  increase in supply  increase in quantity supplied  decrease in supply  decrease in quantity supplied Answer: a) The shift from S1 to DS in the graph above illustrates a/an __________________ in the market for bagels. Decrease in supply b) Cereal and milk are complements. If the price of cereal decreases, there will be a/an__________________ in the market for milk. Increase in demand c) The movement from A to B in the graph above illustrates a/an __________________ in the market for new houses. Increase in quantity supplied d) An increase in the number of sellers of pizza leads to a/an__________________ in the market for pizza. Increase in supply

e) The movement from A to B in the graph above illustrates a/an__________________ in the market for scooters. Decrease in quantity supplied f) If the price of smoothies increases, there will be a/an__________________ in the market for smoothies. Decrease in demand g) The shift from D1 to D2 in the graph above illustrates a/an __________________ in the market for new houses. Decrease in quantity demanded h) The Law of Supply says that when the price of a good decreases, there will be a/an__________________ for the good. Decrease in quantity supplied 2. Refer to the graphs below. For each of the scenarios in the table, indicate which graph (A, B, C, or D) correctly illustrates the given change in the market for coffee. Note: All of the graphs depict the market for coffee. You will use some of the graphs more than once . Please give your answers in the second column of the table. Quantity demand is from point to point – decrease in demand something else causes the changes Answer: a) Consumer income decreases (coffee is a normal good). B

b) The price of coffee increases. C c) There is a decrease in the number of buyers in the market for coffee. B d) The price of donuts decreases (donuts are a complement to coffee). A e) The price of coffee decreases. D f) The colder weather makes people want to buy more coffee. A 3. Refer to the graphs below. For each of the scenarios in the table, indicate which graph (E, F, G, or H) correctly illustrates the given change in the market for coffee. Note: All of the graphs depict the market for coffee. You will use some of the graphs more than once . Please give your answers in the second column of the table. Answer: a) The price of inputs used to produce coffee decreases. E b) The price of coffee decreases. G c) The government has started to subsidize coffee production. E d) There is a decrease in the number of sellers of coffee. F e) The government increases the amount of taxes that coffee producers must pay. F f) The price of coffee increases. G 4. Give an example of a good that you consider to be a normal good. Briefly explain why. Having a winter coat during the winter time would be considered a normal good because it is necessary during the cold weather to prevent frostbite or other injuries that the cold can cause. 5. Give an example of a good that you consider to be an inferior good. Briefly explain why. Getting the Great Value brand peanut butter at Walmart instead of the Jiffy brand because it includes similar, if not the same ingredients but for a lower price. 6. Give an example of a good that you consider to be a neutral good. Briefly explain why. An example of a neutral good is a medicine that is taken daily and needed for survival by one person but not necessarily by another person.

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