Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 4, Problem 4QAP
To determine
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Students have asked these similar questions
Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.”Do you agree or disagree with this view?
Disagree - the reduction in demand will push the equilibrium price below its original level.
Disagree - this confuses a change in demand with a change in quantity demanded.
Agree - the price increase will ultimately leave cigarette consumption unchanged.
Disagree - higher cigarette prices will actually increase the demand for cigarettes.
Suppose 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?
More than 20 states have laws outlawing price gouging during a state of emergency, which might be declared after a
hurricane or an earthquake. These laws prohibit price increases on basic necessities, such as gasoline. Which of the
arguments against price ceilings might not be significant during a state of emergency?
It might be the case that during an emergency, consumers have little concern over the quality of a good that is
available.
It might be the case that during an emergency, consumers have little concern over the quantity of a good that is
available.
It might be the case that during an emergency, consumers have lttle concern over the price of a good that is
available
It might be the case that during an emergency, consumers have little concern over the location of a good that is
available.
Chapter 4 Solutions
Microeconomics
Ch. 4.1 - Prob. 1QCh. 4.1 - Prob. 2QCh. 4.1 - Prob. 3QCh. 4.1 - Prob. 4QCh. 4.1 - Prob. 5QCh. 4.1 - Prob. 6QCh. 4.1 - Prob. 7QCh. 4.1 - Prob. 8QCh. 4.1 - Prob. 9QCh. 4.1 - Prob. 10Q
Ch. 4 - Prob. 1QECh. 4 - Prob. 2QECh. 4 - Prob. 3QECh. 4 - Prob. 4QECh. 4 - Prob. 5QECh. 4 - Prob. 6QECh. 4 - Prob. 7QECh. 4 - Prob. 8QECh. 4 - Prob. 9QECh. 4 - Prob. 10QECh. 4 - Prob. 11QECh. 4 - Prob. 12QECh. 4 - Prob. 13QECh. 4 - Prob. 14QECh. 4 - Prob. 15QECh. 4 - Prob. 16QECh. 4 - Prob. 17QECh. 4 - Prob. 18QECh. 4 - Prob. 19QECh. 4 - Prob. 20QECh. 4 - Prob. 21QECh. 4 - Prob. 22QECh. 4 - Prob. 23QECh. 4 - Prob. 24QECh. 4 - Prob. 1QAPCh. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Prob. 4QAPCh. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 1IPCh. 4 - Prob. 2IPCh. 4 - Prob. 3IPCh. 4 - Prob. 4IPCh. 4 - Prob. 5IP
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- True/False Market price is an macroeconomic concept.arrow_forwardThe drug war There is a debate in the US and in Europe as to how to influence the market for drugs such as cocaine. Some argue that the answer is to reduce the supply of drugs from Colombia – which would otherwise eventually find their way onto the world markets – by giving aid to the Colombian government to fight the drug suppliers. If this is successful, it will drive up the price of cocaine on the streets. Higher prices mean that fewer people will be willing and able to buy drugs, resulting in a fall in demand. This scenario can be seen in Figure 1.13(a) where a successful anti-drug policy in Colombia would decrease supply, i.e. shift the supply curve for cocaine upwards and to the left so that there is an excess demand for cocaine at price P. This will result in a rise in the equilibrium price of cocaine from P to P1. The quantity demanded will contract along the demand curve D from Q to Q1 as price rises from P to P1. Critics of these ideas argue that programmes…arrow_forwardAccording to the figure, what combination would have caused equilibrium to move from point A to point E? 70 60 50 28 Price (S) 40 40 30 20 10 10 <α 0 5 10 15. Quantity a shift in supply to the left and a shift in demand to the left a shift in supply to the right and a shift in demand to the left a shift in demand to the right and a shift in supply to the left a shift in supply to the right and a shift in demand to the right.arrow_forward
- Answer the questions below about the Wall St Journal video – How the Pandemic Is Accelerating Changes in Your Packaging. In typical economist fashion, let’s simplify the analysis by assuming that there is only one online product called NOZAMAs that is delivered to consumers. The market for NOZAMAs has demand and supply curves of the usual shape.A) Draw a diagram of the NOZAMAs market in an initial equilibrium, and label the axes and the curves. When the pandemic starts, how would you explain what happens in terms of the five factors that can change market demand? Show what happens on the diagram, all other things unchanged. Explain the sequence of events in words, using correct terminology to distinguish between changes in demand or supply, versus changes in quantity demanded or quantity supplied.B) Pandemic pressures increased the price of cardboard packaging. In economic terminology, what kinds of products are cardboard packaging and NOZAMAs? Which elasticity concept captures the…arrow_forwardWhy would a shift in supply or demand happen as a result in a market equilibrium with higher prices but lower sales volume?arrow_forwardWhen an economist states the supply of a product has decreased, he or she has concluded that a) A smaller quantity will be produced at every price b) The price is too high for equilibrium c)a greater quanity will produced at every price d) the price is too low equilibrium. e) demand was too high for producers to make a profit.arrow_forward
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