Economics

1 Microeconom Oct 29 Developing Application and Analysis Skills 1. a) Explain the law of demand, giving one 4. Predict the effect on demand for the prod- example from your daily life. For your ucts in the following situations. Sketch a example, give possible causes for graph for each to illustrate your prediction. changes in quantity demanded, and a) Cola Company X raises the price for its possible causes for a change in demand. soft drink, while its competitor, Cola b) Give one example of an exception to Company Y, does not. the law of demand. b) Researchers determine that consuming high-fibre foods, such as broccoli, reduces 2. A distributor of autographed baseball bats the risk of developing certain cancers. has conducted a study that indicates there c) The price of a slice of pizza in the cafete- 's a relationship between the price of bats ria rises from $1.50 to $2.00. and the number of bats sold. The study d) An aggressive TV advertising campaign shows that 2000 bats are sold at a price of for shaving cream starts during the $50 per bat, 3000 at a price of $40, 4000 hockey playoff season. at a price of $30, 6000 at a price of $20, e) Patrons of downtown hot-dog vendors and 9000 at a price of $10. learn that several people have become seriously ill after eating hot dogs sold by a) Create a demand schedule and curve show- their favourite vendor. ing the demand for autographed bats. 1) A shortage of available housing is pre- b) On your graph, show the probable dicted for the next six months. Impact on demand if another supplier g) Grocery stores announce that they offered autographed baseballs at half expect a price increase for coffee. the price of the bats. h) The price of hamburgers increases in the staff cafeteria. 3. For each of the following situations, state i) Sixty-five students come to Veblen whether demand for the product(s) will Secondary School for a conference and increase, decrease, or stay constant. If swell the lines in the school cafeteria. demand will change, state which demand determinant is the cause of the change. a) A rise in pork prices affects beef producers. b) A downturn in the economy has an impact on the steel industry. c) A drought in Manitoba raises concerns that wheat prices will rise in the near future. d) A fall in the price per carton of milk affects the dairy industry