Answered: A) For each of the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 2

A) For each of the following statements, illustrate the effect of each event on the market for red snapper fish and indicate the effects on the equilibrium price and quantity.
A surgeon general warns that high-cholesterol foods such as beef cause heart attacks.
A new fishing wire reduces the time taken to harvest fish while at the same time there is a report that persons have developed food poisoning from consuming fish.

B) The Trinidad and Tobago government administers two programs that affect the market for cigarettes. Advertisements and labeling requirements which are aimed at making the public aware of the dangers of cigarettes. At the same time, the Ministry of Agriculture limits the amount of land that can be devoted to tobacco production. Are these two programs useful in the goal of reducing cigarette consumption? As part of your answer, illustrate graphically the effects of both policies on the market for cigarettes.

Question 3

Explain whether each of the following statements describes a change in demand or a change in quantity demanded. Illustrate the appropriate change and specify whether each change represents an increase or a decrease.

Payless Shoe Source sees a 35 per cent increase in sales of its athletic shoes during a 1 week, half-price sale.
Aisha receives a demotion which results in a cut in her salary and she is no longer able purchase her usual fruit for the week.
When the price of chicken unexpectedly rises, many consumers choose to purchase corned beef instead.
Given the existing problems with its airbag system, Honda Motors has experienced a decline in sales of its Accord automobile.
Ian, a manager at Kiddles Supermarket, decides to forego his vacation to New York when he learns that all employees’ salaries will be cut by 5 percent at the end of the month.

Question 4

In what ways is economics a science and why do economists make assumptions?
What is the importance of the circular-flow diagram?
On the Forbes 2021 list of the World’s Billionaires, Jeff Bezos ranks at the top with a net worth of US$177 billion. Does he face scarcity, or does scarcity only affect those with more limited incomes and lower net worth?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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