The change in price expectations.

Question

Given Supply changed from S1 to S2, whaich of the following statements are TRUE? This is a decrease in supply. This represents an increase in supply. A possible reason for this change is an increase in demand. A possible reason for this change is a decrease in demand. A possible reason for this change is a decrease in resource prices. A possible reason for this change is an increase in resource prices. A possible reason for this change is better production technology. A possible reason for this change is change in consumer tastes. A possible reason for this change is increasing number of sellers. A possible reason for this change is decreasing number of sellers. A possible reason for this change is a lower price of a complement in production.

Answer 1

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Chapter 11, Problem 10MC

To determine

The change in price expectations.

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Given Supply changed from S1 to S2, whaich of the following statements are TRUE? This is a decrease in supply. This represents an increase in supply. A possible reason for this change is an increase in demand. A possible reason for this change is a decrease in demand. A possible reason for this change is a decrease in resource prices. A possible reason for this change is an increase in resource prices. A possible reason for this change is better production technology. A possible reason for this change is change in consumer tastes. A possible reason for this change is increasing number of sellers. A possible reason for this change is decreasing number of sellers. A possible reason for this change is a lower price of a complement in production.

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Predict the impact on each market. Use + and – to indicate whether there will be anincrease or decrease in demand (D), supply (S), equilibrium price (P) and equilibriumquantity (Q). If there is no change, use N, and if the change cannot be predicted, use Ufor uncertain. Market Event D S P Q Canadian Wine Early frost destroys a large percentage of the grape crop - - + - Wood-burning The price of heating oil and natural gas triples + stoves Cell phones Technological advances reduce the costs of producing cell phones Gold Large gold deposits are discovered Fast foods The public show great concern over high sodium and cholesterol in fast foods; also, there is an increase in the minimum wage Bicycles There is increasing concern by consumers about physical fitness; also, the price of gasoline falls.