7. Find the flaws in reasoning in the following statements, paying particular attention to the distinction between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate what actually hap- pens in each situation. a. “A technological innovation that lowers the cost of producing a good might seem at first to result in a reduction in the price of the good to consumcrs.E a fall in price will increase demand for the gocd, and higher demand will send the price up again. It is not certain, therefore, that an innovation will really reduce price in the end." b. "A study 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."
7. Find the flaws in reasoning in the following statements, paying particular attention to the distinction between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate what actually hap- pens in each situation. a. “A technological innovation that lowers the cost of producing a good might seem at first to result in a reduction in the price of the good to consumcrs.E a fall in price will increase demand for the gocd, and higher demand will send the price up again. It is not certain, therefore, that an innovation will really reduce price in the end." b. "A study 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."
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:7. Find the flaws in reasoning in the following statements,
paying particular attention to the distinction between
shifts of and movements along the supply and demand
curves. Draw a diagram to illustrate what actually hap-
pens in each situation.
a. “A technological innovation that lowers the cost of
producing a good might seem at first to resuli in a
reduction in the price of the good to consumers.
a fall in price will increase demand for the good,
and higher demand will send the price up again.
It is not certain, therefore, that an innovation will
really reduce price in the end."
b. "A study 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."
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