Follow the instructions below to answer the following questions.
Answer the following questions using knowledge, google or textbooks. 7. Find the flaws in reasoning in the following statements, paying particular attention to the distinction 2. In a supply and demand diagram, draw the shift of the demand curve for hamburgers in your hometown due to the following events. In each case, show the effect on equilibrium price and quantity. between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate what a. The price of tacos increases. actually happens in each situation. All hamburger sellers raise the price of their french fries. a. "A technological innovation that lowers the cost of producing a good might seem at first to result c. Income falls in town. Assume that hamburgers are a normal good for most people. in a reduction in the price of the good to consumers. But a fall in price will increase demand for d. Income falls in town. Assume that hamburgers are an inferior good for most people. the good, and higher demand will send the price up again. It is not certain, therefore, that an e. Hot dog stands cut the price of hot dogs. innovation will really reduce price in the end." b. "A study shows that eating a clove of garlic a day can help prevent heart disease, causing many 4. Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the consumers to demand more garlic e in demand results in a rise in the price of garlic. equilibrium quantity of each of the following events. Consumers, seeing that the price of garlic has gone up, reduce their demand for garlic. This The market for hotel rooms in your town causes the demand for garlic to decrease and the price of garlic to fall. Therefore, the ultimate Case 1: The wages of housekeepers go up effect of the study on the price of garlic is uncertain." Case 2: A n political convention will be held in your town, attracting many visitors from across the country. 9. In recent years, the number of car producers in China has increased rapidly. In fact, China now has The market for Kansas City Chiefs cotton T-shirts more car brands than the United States. In addition, car sales have climbed every year and automakers Case 1: The Chiefs win the Super Bowl. Case 2: The price of cotton increases. have increased their output at even faster rates, causing fierce competition and a decline in prices. At the same time, Chinese consumers' incomes have risen. Assume that cars are a normal good. Draw a diagram c. The market for bagels Case 1: People realize that bagels are high in calories and sugar. Case 2: People have less time to cook breakfast in the morning. 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 synthetic paper. 6. Suppose that the supply schedule of Maine lobsters is as follows: Price of lobster (per pound Quantity of lobster supplied (pounds) $25 800 20 700 15 600 of the supply and demand curves for cars in China to explain what has happened in the Chinese car 10 500 market. 400 12. After several years of decline, the market for handmade acoustic guitars is making a comeback. These Suppose that Maine lobsters can be sold only in the United States. The U.S. demand schedule for Maine guitars are usually made in small workshops employing relatively few highly skilled luthiers. Assess the lobsters is as follows: impact on the equilibrium price and quantity of handmade acoustic guitars as a result of each of the Price of lobster (per pound) Quantity of lobster supplied (pounds) following events. In your answers indicate which curve(s) shift(s) and in which direction. a. Environmentalists succeed in having the use of Brazilian rosewood banned in the United States, $25 200 forcing luthiers to seek out alternativ 20 400 b. A foreign producer reengineers the guitar-making process and floods the market with identical guitars. 15 600 c. Music featuring handmade acoustic guitars makes a comeback as audiences tire of heavy metal and alternative rock music. d. The country goes into a deep recession and the income of the average American falls sharply 14. Will Shakespeare is a struggling playwright in sixteenth-century London. As the price he receives for writing a play increases, he is willing to write more plays. For the following situations, use a diagram to illustrate how each event affects the equilibrium price and quantity in the market for Shakespeare's plays. a. The playwright Christopher Marlowe, Shakespeare's chief rival, is killed in a bar brawl. b. The bubonic plague, a deadly infectious disease, breaks out in London. c. To celebrate the defeat of the Spanish Armada, Queen Elizabeth declares several weeks of festivities, which involves commissioning new plays. 10 800 16. Use a diagram to illustrate how each of the following events affects the equilibrium price and quantity 1000 of pizza. a. The price of mozzarella cheese rises. a. Draw the demand curve and the supply curve for Maine lobsters. What are the equilibrium price The health hazards of hamburgers are widely publicized. and quantity of lobsters? c. The price of tomato sauce falls. The incomes of consumers rise, and pizza is an inferior good. Now suppose that Maine lobsters can be sold in France. The French demand schedule for Maine lobsters e. Consumers expect the price of pizza to fall next week. s as follows: Price of lobster (per pound) Quantity of lobster supplied (pounds) $25 100 20 300 15 500 10 700 900 What is the demand schedule for Maine lobsters now that French consumers can also buy them? Draw a supply and demand diagram that illustrates the new equilibrium price and quantity of lobsters. What will happen to the price at which fishermen can sell lobster? What will happen to the price paid by U.S. consumers? What will happen to the quantity consumed by U.S. consumers
