Effect on the demand and supply curve. Concept Introduction: Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period. Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

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Answer 1

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Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

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Short Description Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85) a. How much does aggregate demand need to change to restore the…

Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 1000 billion dollars with an increment of 50 billion dollars, and the y-axis is scaled from 0 to 180 units with an increment of 10 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (200, 40)Point 2 at (800, 160)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (200, 160)Point 2 at (800, 40)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (350, 170)Point 2 at (900, 60)A vertical Long-run Aggregate Supply, LRAS line with two endpoints:Point 1 at (500, 170)Point 2 at (500, 0)Two Reference Points:Lines AS and AD1 intersect at (600, 120)Lines AS, AD, and LRAS intersect at (500, 100) a. How much does aggregate demand need to change to restore the…

a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.95. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.

Answer 2

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Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

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Answer 3

Question

100%

Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

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Answer 4

Question

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Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

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Answer 5

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Answer 6

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Answer 7

Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

Answer 8

Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.

Answer 9

Chapter 4, Problem 1.1P

To determine

Effect on the demand and supply curve.

Concept Introduction:

Demand curve shows all the possible combinations of price and quantity demanded of the good at a given time period.

Supply curve shows all the possible combinations of price and quantity supplied of the good at a given time period.

Answer 10

Expert Solution & Answer

Explanation of Solution

a. Due to the new cure of lung cancer, the smoker will demand more cigarettes because there is a cure of the lung cancer now. This will shift the demand curve to the right.

b. Due to the increase in the price of cigars, the demand curve of the cigarettes will shift to the right because cigars are the substitute of the cigarettes.

c. Due to the increase in the wage, the demand curve of the cigarettes will shift to the right because people now have more money to spend.

d. Due to the discovery of the new fertilizer, the supply curve of the cigarettes will shift to the right because of the increase in the productivity.

e. Due to the increase in the price of matches or lighter, the demand curve will shift to the left because matches or lighter and cigarettes are complementary goods.

f. Due to the new laws which restricts the smoking in public places, the demand curve of the cigarettes will shift to the left because everybody has to respect the law.