Chapter 4- Macroeconomics
If firms expect future price increases, how would the supply of smartphones be impacted?
Graph shifts left
Using the graph on the right, illustrate the impact of an increase in the price of the good from $20 per unit to $30 per unit, assuming everything else in the economy remains the same.
A is point (61,30) B is point (33,30)
If the number of sellers increases, how would the supply of smartphones be impacted?
Graph shifts right
Using the line drawing tool, depict the government's demand curve for sugar. Label your curve 'D'.
Graph the line y=18.75
Which of the following is not one of the four major factors that shifts the supply curve when it changes?
Anything other than these: 1. Prices of inputs used to produce a good 2. Technology used to produce a good 3. Number and scale of sellers 4. Sellers' beliefs about the future
When comparing the equilibriums in the lobster market for August and November, the equilibrium quantity is ______ in November than in August, while the equilibrium price is ______.
lower; higher, lower, or unchanged.
Lobsters are plentiful and easy to catch in August but scarce and difficult to catch in November. In addition, vacationers shift the demand for lobsters further to the right in August than in any other month. Given this information, we know that _________ is/are higher in August than in other months.
both supply and demand
Graph:
First plot the points, then draw the line
If people expect future price increases, how would the demand for a normal good be impacted?
Just draw the same line but over to the right one spot.
Given that grape juice and orange juice are substitutes and that the previous graph illustrated how the nasty fungus led to an increase in the price of orange juice, graph the following:
Make D2 to the right of D1 and label the intersection with S1 B
A nasty fungus sharply reduces the supply of oranges. What will happen to the equilibrium price and quantity of both orange juice and grape juice as a result of this event?
Make S2 higher up than S1 and label the intersection with D1 A
On the right is a graph of the supply and demand for lobsters in August. Compare the equilibrium price and quantity of lobsters in August to the equilibrium price and quantity of lobsters in November.
Make the line DN parallel to DA but further down and to the left. Make the line SN parallel to SA but higher up and to the left. Plot the point where DN and SN meet as N.
Assume that a sharp increase in demand for pinot noir leads to an increase in the price for land. Graph the impact of this price increase for land on the market for Gravenstein apples.
Make the new line S2 start at zero and intersect with D1 higher up than S1. Plot a point where they intersect.
Does the shape of the market demand curve differ from the shape of an individual demand curve?
No, they both tend to be downward-sloping curves.
If the only change in the market was that the price increased to $30, then we know that the quantity supplied will be ________ the quantity demanded, resulting in ________, which is also known as ___________.
greater than, an excess supply, a surplus
Consider the market for coffee illustrated in the figure on the right. Show the effect of the drought on the coffee market.
Plot point e2 further left on the D1 line than e1 and have S2 pass through e2, parallel to S1
What do you think the impact of this drought has been on the equilibrium price and quantity of tea? Draw a supply and demand diagram for the tea market to explain your answer.
Plot point e2 further right on the S1 line than e1 and have D2 pass through e2, parallel to D1
Which of the following is not one of the five major factors that shifts the demand curve when it changes?
Prices of inputs used to produce the good or the price of the good itself
Given this information, what is the relationship between pinot noir wine and Gravenstein apples?
They share a common input
chart
add the quantities for pizza hut and domino's at each price
If the demand for pinot noir suddenly shifts sharply to the right, we would expect to see __________ in the demand for land in Sonoma, which would _________ the equilibrium price of land.
an increase, increase
In a perfectly competitive market, sellers _______ and buyers _________.
cannot charge more than the market price, cannot pay less than the market price
Given the supply and demand curves on the right, when the price of the good is $20, we say that the market is in _________ . At this price, we know that the quantity supplied is _______ the quantity demanded.
competitive equilibrium, equal to
Market demand is derived by __________.
fixing the price and adding up the quantities that each buyer demands
Since both pinot noir wine and Gravenstein apples use the same land in Sonoma, California, a sharp increase in demand for pinot noir wine will result in a ___________ price for Gravenstein apples and a _________ equilibrium quantity.
higher, lower
As a firm produces more of a good, the cost of producing each additional unit ______. his implies that the marginal cost of producing a good _______ as you make more of that good.
increases, increases
Given this information, if the price of a book is $25, the quantity demanded of books will be ________ the quantity of books demanded when the price is $10 per book.
less than
Suppose instead that the price of the good dropped below the competitive equilibrium price to a price of $15 per unit. If this were to occur, then the quantity supplied would be __________ the quantity demanded, resulting in ________, which is also known as _________.
less than, an excess demand, a shortage
In a perfectly competitive market, if one seller chooses to charge a price for its good that is slightly higher than the market price, then it will _________.
lose all or almost all of its customers
The relationship that exists between these two variables can be described as ___________.
negatively related
In this situation, sugar mills will __________.
not sell to private buyers at this lower price and will sell to the government instead, which will drive up the domestic price until it reaches 18.75 cents per pound.
graph
plot the points
The relationship that exists between these two variables can be described as __________.
positively related
Aggregation consists of fixing the ______________ and adding up the _____________ by each firm.
price of the good, quantity supplied
The Law of Demand states that as the price of a good increases, ceteris paribus, the ________ decreases. This can be shown graphically with ________ demand curve or numerically in a table using a ________.
quantity demanded, a downward-sloping, demand schedule
The Law of Supply states that as the price of a good increases, ceteris paribus, the _________ of that good increases. This can be shown graphically with ________ supply curve or numerically in a table using a __________.
quantity supplied, an upward-sloping, supply schedule
When one of the five major factors changes, causing an increase in demand, the demand curve shifts __________.
rightward
When one of the four major factors changes, causing an increase in supply, the supply curve shifts ________.
rightward
Suppose the price of plums increases and the demand for apples increases. You determine that these goods must be ______________.
substitutes
Coffee and tea are likely __________ because an increase in the price of coffee ________ the demand for tea.
substitutes, increases
The supply curve represents ___________.
the minimum price sellers are willing to accept to sell an extra unit of a good
