Subpart (a):
Demand and supply.
Subpart (a):
Answer to Problem 4P
Explanation of Solution
When the supply decreases with constant demand curve, it will lead to a decrease in the
Figure -1
In Figure -1, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand and the demand curve shifts from DD to DD1; ‘SS’ represents the supply curve and the supply curve shifts from SS to SS1. Decrease in supply will lead to a decrease in the equilibrium quantity from ‘Q1 to Q2’ and an increase in the equilibrium price from ‘P1 to P2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (b):
Demand and supply.
Subpart (b):
Answer to Problem 4P
Price shifts down and quantity shifts down – b.
Explanation of Solution
When the demand decreases with constant supply curve, it will lead to a decrease in the equilibrium quantity and equilibrium price. This is shown below in Figure -2:
Figure -2
In Figure -2, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand and the demand curve shifts to the left from DD to DD1; ‘SS’ represents the supply curve. Decrease in supply will lead to a decrease in the equilibrium quantity from ‘Q1 to Q2’ and the equilibrium price from ‘P1 to P2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (c):
Demand and supply.
Subpart (c):
Answer to Problem 4P
Price shifts down and quantity shifts up – c.
Explanation of Solution
When the demand is constant with an increase in the supply curve, it will lead to a decrease in the equilibrium price and an increase in the equilibrium quantity. This is shown below in Figure -3:
Figure -3
In Figure -3, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand and ‘SS’ represents the supply curve and the supply curve shifts to the right from SS to SS1. Increase in supply will lead to a decrease in the equilibrium price from ‘P1 to P2’ and an increase in the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (d):
Demand and supply.
Subpart (d):
Answer to Problem 4P
Price will indeterminate and quantity shifts up – d.
Explanation of Solution
When both the demand and supply increases, it will lead to an increase in the equilibrium quantity and the change in price is indeterminate. This is because an increase in the supply puts a downward pressure on the equilibrium price. This is shown below in Figure – 4:
Figure -4
In Figure -4, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand curve and ‘SS’ represents the supply curve. Due to the increase in supply and demand, the supply curve shifts to the right from SS to SS1 and the demand curve shifts from DD to DD1. An increase in the supply leads to an increase in the equilibrium price from ‘P1 to P2’ and the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (e):
Demand and supply.
Subpart (e):
Answer to Problem 4P
Price shifts up and quantity shifts up – e.
Explanation of Solution
If the demand increases with constant supply, it leads to an increase in the equilibrium quantity and equilibrium price. This is shown below in Figure – 5:
Figure -5
In Figure -5, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand curve and ‘SS’ represents the supply curve. Due to an increase in demand, the demand curve will shift the curve to the right from DD to DD1. An increase in demand will increase the equilibrium price from ‘P1 to P2’ and increases the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (f):
Demand and supply.
Subpart (f):
Answer to Problem 4P
Price shifts down and quantity indeterminate – f.
Explanation of Solution
If the supply increases with a decrease in demand, it leads to a decrease in the equilibrium price because both the curves put a pressure on the equilibrium price. Thus, an increase in supply increases the equilibrium quantity and a decrease in demand lead to a decrease in the equilibrium quantity. This is shown below in Figure – 6:
Figure -6
In Figure -6, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand curve and ‘SS’ represents the supply curve. Due to a decrease in demand and an increase in supply, demand curve will shift the curve to the left from DD to DD1. An increase in supply will lead to an increase in the equilibrium quantity from ‘P1 to P2’ and increases the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (g):
Demand and supply.
Subpart (g):
Answer to Problem 4P
Price shifts up and quantity indeterminate – g.
Explanation of Solution
If the supply decreases with an increase in demand, it will lead to an increase in the equilibrium price because both the curve put a pressure on the equilibrium price. An increase in demand will lead to an increase in the equilibrium quantity. This is shown below in Figure – 7:
Figure -7
In Figure -7, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand and ‘SS’ represents the supply curve. Due to a decrease in supply and an increase in demand, the supply curve will shift the curve to the left from SS to SS1 and the demand curve shifts the curve to the right, which leads to an increase in the equilibrium price from ‘P1 to P2’ and the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Subpart (h):
Demand and supply.
Subpart (h):
Answer to Problem 4P
Price indeterminate and quantity shifts down – h.
Explanation of Solution
If both the supply and demand decreases, then it lead to a decrease in the equilibrium quantity and the change in equilibrium price is indeterminate. This is because a decrease in supply puts an upward pressure on the equilibrium price. This is shown below in Figure – 8:
Figure -8
In Figure -8, the horizontal axis measures the quantity supplied and the vertical axis measures the price of the balls. ‘DD’ represents the demand and ‘SS’ represents the supply curve. Due to a decrease in supply and a decrease in demand, the supply curve will shift the curve to the left from SS to SS1 and the demand curve shifts the curve to the left, which lead to an increase in the equilibrium price from ‘P1 to P2’ and a decrease in the equilibrium quantity from ‘Q1 to Q2’.
Concept introduction:
Demand: Demand refers to the total value of the goods and services that are demanded at a particular price in the given period of time.
Supply: Supply refers to the total value of the goods and services that are available for purchase at a particular price in the given period of time.
Want to see more full solutions like this?
Chapter 3 Solutions
Macroeconomics
- 3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?arrow_forwardshow written calculation for Barrow_forwardProblem 1: 1. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%? 2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%? 3. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is 8% and dividends are expected to grow at a rate of 2% per year?arrow_forward
- d-farrow_forwardG please!arrow_forward4. Consider two polluting firms, with the marginal abatement costs of polluters 1 and 2, respectively, equal to MAC₁ = 20-E1 MAC2 = 12-E2 a. What is the unregulated level of pollution for each firm? b. Assume policymakers have decided to cut the level of pollution in half. The way they intend to accomplish this goal is to require both firms to cut their pollution in half. What are the total costs of abatement from the policy? And how are these costs distributed between the firms? c. Is this uniform quota on emissions across firms the most cost-effective manner in which to reduce emissions by 50%?arrow_forward
- Don't used hand raiting and don't used Ai solutionarrow_forwardThanks in advance!arrow_forwardI need help figuring this out. I'm pretty sure this is correct?If Zambia is open to international trade in oranges without any restrictions, it will import 180 tons of oranges.I can't figure these two out: 1) Suppose the Zambian government wants to reduce imports to exactly 60 tons of oranges to help domestic producers. A tariff of ???? per ton will achieve this. 2) A tariff set at this level would raise ????in revenue for the Zambian government.arrow_forward
- 16:10 ← BEC 3701 - Assignments-... KWAME NKRUMAH UNIVERSITY TEACHING FOR EXCELLENCE SCHOOL OF BUSINESS STUDIES DEPARTMENT OF ECONOMICS AND FINANCE ADVANCED MICRO-ECONOMICS (BEC 3701) Assignments INSTRUCTIONS: Check instructions below: LTE 1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of the following: a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks] b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks] c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks] d) the Expenditure Function E(P1, P2, U°) [3 Marks] e) Draw a diagram of the solution. There should be two graphs, one above the other; the first containing the indifference curves and budget constraint that characterize the solution to the consumer's choice problem; the second characterizing the demand…arrow_forwardHow would you answer the question in the News Wire “Future Living Standards”? Why?arrow_forwardal Problems (v) T (ix) F 1. Out of total number of 2807 women, who were interviewed for employment in a textile factory, 912 were from textile areas and the rest from non-textile areas. Amongst the married women, who belonged to textile areas, 347 were having some work experience and 173 did not have work experience, while for non-textile areas the corresponding figures were 199 and 670 respectively. The total number of women having no experience was 1841 of whom 311 resided in textile areas. Of the total number of women, 1418 were unmarried and of these the number of women having experience in the textile and non-textile areas was 254 and 166 respectively. Tabulate the above information. [CA. (Foundation), May 2000 Exactly (14) of the total employees of a sugar mill were these were married and one-halfarrow_forward
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning