Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 5, Problem 2P
To determine
(a)
To show:
The effect of changes in terms of the relevant
To determine
(b)
To show:
The effect of changes in terms of the relevant supply and demand curve in the given case.
To determine
(c)
To show:
The effect of changes in terms of the relevant supply and demand curve in the given case.
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Question 2
Market researchers have studied the market for orange juice, and their estimates for the supply
and the demand for orange juice per month are as follows:
Price per gallon ($)
Quantity demanded
200
Quantity Supplied
250
600
1
200
300
500
150
400
400
300
200
100
500
50
600
a. Using the above data, graph the demand for and the supply of orange juice. Identify the
equilibrium point as E, and use dotted lines to connect E to the equilibrium price on the price
axis and equilibrium quantity on the quantity axis.
b. Assume that the government decided to set a price ceiling of $100 per gallon.
i) Define price ceiling
ii) Explain three effects unat unis legal maximum price will have on the supply of orange juice in
the market. (Draw a new hypothetical diagram to illustrate)
Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity
of each of the following events. (a) The market for hotel rooms in your town Case 1: The wages of housekeepers go up.
Case 2: A major political meeting will be held in your town, attracting many visitors across the country. (b) The market for
bagels Case 1: People realize that bagels are high in calories and sugar, which could cause overweight and other health
issues. Case 2: People have less time to cook breakfast in the morning. (c) The market for the Krugman and Wells
economics textbook Case 1: Your professor makes it required reading for all of his or her students. Case 2: Printing costs
for textbooks are lowered by the use of cheaper paper.
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.
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