Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 3, Problem 10QP
To determine
Explain what the law of increase in
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In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example.
EXAMPLE/ Product - Hamburgers Event - The price of steak increases Answer/ Demand increases - Curve shifts right - Price of substitutes
1. Pepsi - The price of Coke decreases dramatically.
2. Steak - Incomes fall due to the recession
3. Hair dye - Hair dye is successfully advertised in the media.
4. Computer software - The price of computers goes down.
The following graph shows the supply curve for sedans in an imaginary market. For simplicity, assume that all sedans are identical and sell for the same price. Two factors that affect the supply of sedans are the level of technical knowledge—in this case, the speed with which manufacturing robots can fasten bolts, or robot speed—and the wage rate that auto manufacturers must pay their employees. Initially, the graph shows the supply curve when robots can fasten 2,500 bolts per hour and autoworkers earn $25 per hour.
Suppose that the price of a sedan increases from $21,000 to $26,000. This would cause the quantity supplied of sedans to ________ (options: increase, decrease) , which is reflected on the graph by a ________ (options: shift of, movement along) the supply curve.
Suppose the workers' union negotiates a pay raise. This causes a _________ (options: leftward movement along, rightward movement along, leftward shift of, rightward shift of) the supply curve because the pay raise…
The following graph shows the supply curve for sedans in an imaginary market. For simplicity, assume that all sedans are identical and sell for the
same price. Two factors that affect the supply of sedans are the level of technical knowledge in this case, the speed with which manufacturing robots
can fasten bolts, or robot speed-and the wage rate that auto manufacturers must pay their employees. Initially, the graph shows the supply curve
when robots can fasten 2,500 bolts per hour and autoworkers earn $25 per hour.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Thousands of dollars)
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Supply
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QUANTITY (Sedans per month)
Graph Input Tool
Supply for Sedans
Price of a Sedan
(Thousands of
dollars)
Quantity Supplied
(Sedans…
Chapter 3 Solutions
Economics (Book Only)
Ch. 3.1 - Prob. 1STCh. 3.1 - Prob. 2STCh. 3.1 - Prob. 3STCh. 3.1 - Prob. 4STCh. 3.2 - Prob. 1STCh. 3.2 - Prob. 2STCh. 3.2 - Prob. 3STCh. 3.3 - Prob. 1STCh. 3.3 - Prob. 2STCh. 3.3 - Prob. 3ST
Ch. 3.3 - Prob. 4STCh. 3.3 - Prob. 5STCh. 3 - Prob. 1VQPCh. 3 - Prob. 2VQPCh. 3 - Prob. 3VQPCh. 3 - Prob. 4VQPCh. 3 - Prob. 5VQPCh. 3 - Prob. 6VQPCh. 3 - Prob. 1QPCh. 3 - Prob. 2QPCh. 3 - Prob. 3QPCh. 3 - Prob. 4QPCh. 3 - Prob. 5QPCh. 3 - Prob. 6QPCh. 3 - Prob. 7QPCh. 3 - Prob. 8QPCh. 3 - Prob. 9QPCh. 3 - Prob. 10QPCh. 3 - Prob. 11QPCh. 3 - Prob. 12QPCh. 3 - Prob. 13QPCh. 3 - Prob. 14QPCh. 3 - Prob. 15QPCh. 3 - Prob. 16QPCh. 3 - Prob. 17QPCh. 3 - Prob. 18QPCh. 3 - Prob. 19QPCh. 3 - Prob. 20QPCh. 3 - Prob. 21QPCh. 3 - Prob. 22QPCh. 3 - Prob. 23QPCh. 3 - Prob. 24QPCh. 3 - Prob. 25QPCh. 3 - Prob. 26QPCh. 3 - Prob. 27QPCh. 3 - Prob. 1WNGCh. 3 - Prob. 2WNGCh. 3 - Prob. 3WNGCh. 3 - Prob. 4WNGCh. 3 - Prob. 5WNGCh. 3 - Prob. 6WNGCh. 3 - Prob. 7WNGCh. 3 - Prob. 8WNG
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- Using a product (good or service) of your choice, provide an example of a situation where the demand for that product would increase and shift the demand curve to the right.arrow_forwardA prolific artist, Pablo Picasso (1881-1973) painted 1,000 paintings during what is known as his "Blue Period", and all thousand paintings are on display and hanging in galleries throughout the world. a) Draw the supply curve for Picasso's Blue period works. Why is this supply curve different from other ones you have seen that follow the Law of Supply? b) Given your answer to a), the price of a Blue Period painting will be entirely dependent on what factors? Draw a diagram showing how the price of such paintings will be determined. c) Suppose rich art collectors decided that it is essential to acquire Picasso Blue period art for their collections. Show in a diagram the impact on the market for these paintings.arrow_forwardGiven the scarcity of semiconductors in the production of new cars, what is the effect on the supply curve (e.g. movement or shifts, which direction)? Use the factors of supply (e.g. price of resources, technology, number of sellers, etc.) to explain.arrow_forward
- Suppose that the quantity of corn supplied depends on the price of corn (P) and the amount of rainfall (R). The demand for corn depends on the price of corn and the level of disposable income (I). The equations describing the supply and demand relationships are Qs = 20R + 100P and Qd = 4000 − 100P + 10I. a) Sketch a graph of demand and supply curves b) Sketch a graph that shows the effect of an increase in rainfall on the equilibrium price and quantity of corn. c) Sketch a graph of demand and supply curves that shows the effect of a decrease in disposable income on the equilibrium price and quantity of corn.arrow_forwardThink of a relevant example in your own life of how a change in the market (including information, preferences, technology, price of alternative goods, regulations, taxes, etc.) has shifted either the supply or demand of a good. How did this change affect the market equilibrium for that good or service? Explain. Next, find a relatively recent news article (within the past year) to support your finding (the news search feature in Google is helpful with this). If you cannot find an article specific to your example, you may find an article about another similar good or service. Summarize the article and its findings, then include the URL in your discussion post. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardSuppose one of your friends offered the following argument: a rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply curve, which will lead to an offsetting decrease in price. Therefore, it is impossible to tell what effect an increase in demand will have on price. Do you agree with your friend? If not, what is the flaw in your friend’s reasoning?arrow_forward
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