Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 4, Problem 2TY
(a)
To determine
Plot the
(b)
To determine
The effect of decrease in the price of beef on the equilibrium price and quantity of a hamburger.
(c)
To determine
The effect of increase in the price of pizza on equilibrium price and quantity of a hamburger.
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What are the potential effects in the market for SUVs as the price of gasoline increases. a) draw a supply/demand graph of the automobile market. b) indicate starting equilibrium price and equilibrium quantity. c)analyze graphically the effect of the change given above on equilibrium price and equilibrium quantity in the mobile market.
Consider the market for hazelnuts. Use the supply and demand model to explain the effect of the following scenarios on the equilibrium price (P*) and the equilibrium quantity (Q*) of hazelnuts. In each of the following scenarios, does the supply curve shift? Does the demand curve shift? If there is a shift of the supply and/ or the demand curve, in what direction? Show graphically. Does the equilibrium price of hazelnuts increase or decrease? Does the equilibrium quantity of hazelnuts increase or decrease?
1. The price of almonds, a substitute for hazelnuts, decreases significantly.
2. Hazelnut producers discover a method to pick hazelnuts more efficiently which significantly reduces the cost of hazelnut production.
3. Hazelnut consumers’ incomes increase, and a new location where the climate is appropriate for growing lots of hazelnuts has been discovered. Assume that hazelnuts are a normal good.
Consider the market for hazelnuts. Use the supply and demand model to explain the effect of the following scenarios on the equilibrium price (P*) and the equilibrium quantity (Q*) of hazelnuts. In each of the following scenarios, does the supply curve shift? Does the demand curve shift? If there is a shift of the supply and/ or the demand curve, in what direction? Show graphically. Does the equilibrium price of hazelnuts increase or decrease? Does the equilibrium quantity of hazelnuts increase or decrease?
1. Adverse weather conditions destroy a large amount of hazelnut trees in Turkey, the leading hazelnut producer in the world.
2. The Italian company Ferrero makes a decision to increase the hazelnut content in its Nutella cocoa hazelnut spread.
3. New research finds that hazelnuts lower cholesterol and improve heart health more than people previously thought, and lots of people become aware of the results of the new study.
Chapter 4 Solutions
Economics: Principles & Policy
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