(KEY QUESTION) Consider the market for station wagons. For each of the events listed below, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. a. People decide to have more children. b. The price of mini-vans rises. c. A strike by steelworkers raises steel prices. d. Engineers develop new automated machinery for the production of station wagons. e. A stock market crash lowers people's wealth. f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, or equal to the initial change in demand or supply? Why is this? (recall our discussion in the lectures, you can check slides 3-6 from week 5 or the lecture recordings. g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show them on the diagram and explain what will/may happen to the equilibrium price and quantity (I encourage you to try this for combinations of the other changes too)
(KEY QUESTION) Consider the market for station wagons. For each of the events listed below, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. a. People decide to have more children. b. The price of mini-vans rises. c. A strike by steelworkers raises steel prices. d. Engineers develop new automated machinery for the production of station wagons. e. A stock market crash lowers people's wealth. f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, or equal to the initial change in demand or supply? Why is this? (recall our discussion in the lectures, you can check slides 3-6 from week 5 or the lecture recordings. g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show them on the diagram and explain what will/may happen to the equilibrium price and quantity (I encourage you to try this for combinations of the other changes too)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(KEY QUESTION) Consider the market for station wagons. For each of the events listed below,
identify which of the determinants of demand or supply are affected. Also indicate whether demand
or supply is increased or decreased.
a. People decide to have more children.
b. The
c. A strike by steelworkers raises steel prices.
d. Engineers develop new automated machinery for the production of station wagons.
e. A stock market crash lowers people's wealth.
f. IMPORTANT: In all the above cases, is the change in equilibrium quantity less, more, or
equal to the initial change in demand or supply? Why is this? (recall our discussion in the
lectures, you can check slides 3-6 from week 5 or the lecture recordings.
g. IMPORTANT: Now assume the changes in parts a. and c. happen simultaneously. Show them
on the diagram and explain what will/may happen to the
encourage you to try this for combinations of the other changes too)
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Transcribed Image Text:2. Consider the market for station wagons. For each of the events listed below,
identify which of the determinants of demand or supply are affected. Also indicate
whether demand or supply is increased or decreased.
a. People decide to have more children.
b. The price of mini-vans rises.
c. A strike by steelworkers raises steel prices.
d.
Engineers develop new automated machinery for the production of station
wagons.
A stock market crash lowers people's wealth.
IMPORTANT: Now assume the changes in parts a. and c. happen
simultaneously. Show them on the diagram and explain what will/may
happen to the equilibrium price and quantity.
e.
f.
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