Subpart (a):
causes for the shift in the demand curve for the firm.
Subpart (a):
Explanation of Solution
The demand comes from all the economic agents such as the households, firms as well as the government. The demand is depended on the price level of the economy. The increase and decrease in the price level determines the level of demand in the economy. The aggregation of all the individual demands in the economy is known as the aggregate demand thus, the aggregate demand explains the relationship between the general price level and the level of real GDP demanded in the economy by the economic agents such as the households, firms and the government.
Here, in the case of the McDonald's, the main reason for the increase in the quantity demanded which shifts the demand curve of the firm towards the right is the opening up of the new school. This means that the population in the locality increases and this increase in the population causes the increase in the quantity demanded of the firm. Thus, the demand shifter in the case of McDonald's is the rise in population.
Concept introduction:
Aggregate Demand curve: It is the curve which shows the relationship between the price level in the economy and the quantity of real GDP demanded by the economic agents such as the households, firms as well as the government.
Subpart (b):
causes for the shift in the demand curve for the firm.
Subpart (b):
Explanation of Solution
When the customers are more concerned about the cleanliness in the restaurants, all the restaurants have to keep employees for the purpose of cleaning the restaurant premises as well as the floor of the restaurant and keep it dirt free. This means that the demand for the labor for these purposes increases and this increase in demand and shift in demand is caused because of the changes in the tastes and preferences of the consumers.
Concept introduction:
Aggregate Demand curve: It is the curve which shows the relationship between the price level in the economy and the quantity of real GDP demanded by the economic agents such as the households, firms as well as the government.
Subpart (c):
causes for the shift in the demand curve for the firm.
Subpart (c):
Explanation of Solution
The robots do the work of cleaning and thus, it can replace a labor for the purpose of the cleaning. This means that the robots are the substitutes for the labor for the cleaning purpose. So, when the robots become cheaper, it would increase the demand for robots and cause fall in the demand for the cleaning labors. Here, the demand shifter is the substitutes of labor which is robots.
Want to see more full solutions like this?
Chapter 18 Solutions
Modern Principles: Microeconomics
- 20. Factors 01 pro B. the technological innovations available to companies. A. the laws that regulate manufacturers. C. the resources used to create output D. the waste left over after goods are produced. 21. Table 1.1 shows the tradeoff between different combinations of missile production and home construction, ceteris paribus. Complete the table by calculating the required opportunity costs for both missiles and houses. Then answer the indicated question(s). Combination Number of houses Opportunity cost of houses in Number of missiles terms of missiles J 0 4 K 10,000 3 L 17,000 2 1 M 21,000 0 N 23,000 Opportunity cost of missiles in terms of houses Tutorials-Principles of Economics m health carearrow_forwardIn a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending ______ Group of answer choices Raises the interest rate so that net exports must fall to maintain equilibrium in the goods market. Cannot change the interest rate so that net exports must fall to maintain equilibrium in the goods market. Cannot change the interest rate so income must rise to maintain equilibrium in the money market Raises the interest rate, so that income must rise to maintain equilibrium in the money market.arrow_forwardSuppose a country with a fixed exchange rate decides to implement a devaluation of its currency and commits to maintaining the new fixed parity. This implies (A) ______________ in the demand for its goods and a monetary (B) _______________. Group of answer choices (A) expansion ; (B) contraction (A) contraction ; (B) expansion (A) expansion ; (B) expansion (A) contraction ; (B) contractionarrow_forward
- Assume a small open country under fixed exchanges rate and full capital mobility. Prices are fixed in the short run and equilibrium is given initially at point A. An exogenous increase in public spending shifts the IS curve to IS'. Which of the following statements is true? Group of answer choices A new equilibrium is reached at point B. The TR curve will shift down until it passes through point B. A new equilibrium is reached at point C. Point B can only be reached in the absence of capital mobility.arrow_forwardA decrease in money demand causes the real interest rate to _____ and output to _____ in the short run, before prices adjust to restore equilibrium. Group of answer choices rise; rise fall; fall fall; rise rise; fallarrow_forwardIf a country's policy makers were to continously use expansionary monetary policy in an attempt to hold unemployment below the natural rate , the long urn result would be? Group of answer choices a decrease in the unemployment rate an increase in the level of output All of these an increase in the rate of inflationarrow_forward
- A shift in the Aggregate Supply curve to the right will result in a move to a point that is southwest of where the economy is currently at. Group of answer choices True Falsearrow_forwardAn oil shock can cause stagflation, a period of higher inflation and higher unemployment. When this happens, the economy moves to a point to the northeast of where it currently is. After the economy has moved to the northeast, the Federal Reserve can reduce that inflation without having to worry about causing more unemployment. Group of answer choices True Falsearrow_forwardThe long-run Phillips Curve is vertical which indicates Group of answer choices that in the long-run, there is no tradeoff between inflation and unemployment. that in the long-run, there is no tradeoff between inflation and the price level. None of these that in the long-run, the economy returns to a 4 percent level of inflation.arrow_forward
- Suppose the exchange rate between the British pound and the U.S. dollar is £1 = $2.00. The U.S. government implementsU.S. government implements a contractionary fiscal policya contractionary fiscal policy. Illustrate the impact of this change in the market for pounds. 1.) Using the line drawing tool, draw and label a new demand line. 2.) Using the line drawing tool, draw and label a new supply line. Note: Carefully follow the instructions above and only draw the required objects.arrow_forwardJust Part D please, this is for environmental economicsarrow_forward3. Consider a single firm that manufactures chemicals and generates pollution through its emissions E. Researchers have estimated the MDF and MAC curves for the emissions to be the following: MDF = 4E and MAC = 125 – E Policymakers have decided to implement an emissions tax to control pollution. They are aware that a constant per-unit tax of $100 is an efficient policy. Yet they are also aware that this policy is not politically feasible because of the large tax burden it places on the firm. As a result, policymakers propose a two- part tax: a per unit tax of $75 for the first 15 units of emissions an increase in the per unit tax to $100 for all further units of emissions With an emissions tax, what is the general condition that determines how much pollution the regulated party will emit? What is the efficient level of emissions given the above MDF and MAC curves? What are the firm's total tax payments under the constant $100 per-unit tax? What is the firm's total cost of compliance…arrow_forward
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education