Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
Chapter 4, Problem 2TY
To determine
(a)
To plot: the
To determine
(b)
To analyze: the effect on
To determine
(c)
To analyze: the effect of an increase in the
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Students have asked these similar questions
PRICE (Dollars per cup)
Suppose that Brian and Crystal are the only suppliers of iced lattes in some hypothetical market. Their monthly supply schedules are given by the
following table:
Price
(Dollars per cup)
Brian's Quantity Supplied
Crystal's Quantity Supplied
(Cups)
(Cups)
1
0
3
2
4
6
3
6
8
4
7
10
5
8
11
On the following graph, plot Brian's supply of iced lattes using the green points (triangle symbol). Next, plot Crystal's supply of iced lattes using the
purple points (diamond symbol). Finally, plot the market supply of iced lattes using the orange points (square symbol).
Note: Line segments will automatically connect the points. Remember to plot from left to right.
5
0
0
4
8
12
16
20
24
QUANTITY (Cups)
Brian's Supply
Crystal's Supply
---
Market Supply
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
Macroeconomics: Principles and Policy (MindTap Course List)
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