micro

Determine how the equilibrium quantity in the market for coffee changes if The price of tea, a substitute for coffee, decreases and due to better weather, the price of coffee beans also decreases

Equilibrium quantity may increase, decrease, or stay the same.

Property rights

established rules for ownership of resources and creates incentives for innovation

College students reduce how much detergent they use for each load of laundry in response to higher detergent prices.

movement along the demand curve

College students rush and buy discount furniture to take advantage of an unexpected price drop

movement along the demand curve

1. What is the biggest problem facing Command Economies (socialism)?

Coordination and incentives to direct output

After graduation from law school, Frank is offered one job is Chicago and another in New York. Where should Frank work?

Either-or decisions

Bella is accepted to four graduate school programs. Where should she go to school?

Either-or decisions

Determine how the equilibrium price in the market for coffee changes if The price of tea, a substitute for coffee, decreases and due to better weather, the price of coffee beans also decreases

Equilibrium price decreases.

Firms

organizes resources in order to produce goods and services

College students purchase many more energy drinks during finals week than during the rest of the semester.

shift in the demand curve

Students eat out more often as the federal government increases how much grant money it provides students.

shift in the demand curve

The U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. The accompanying graph represents the market for ethanol. Move the supply and/or demand curves to show how reducing the subsidy will affect the ethanol market.

Equilibrium price increases; Equilibrium quantity decreases

Stone and brick are substitutes in home construction. Consider the market for bricks depicted in the graph. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks.

Equilibrium price increases; Equilibrium quantity increases.

Jake needs to stay awake while he studies for his midterm tomorrow. What quantity of coffee should Jake drink?

Marginal decisions (how much)

Marvin arrives at his favorite buffet to eat Chinese food. Sometimes, he overeats and leaves the buffet with a stomach ache.

Marginal decisions (how much)

Money

allows for the exchange of goods and services using a common unit as a measure of value that is generally accepted as payment.

Markets

brings buyers and sellers together to carry out mutually beneficial exchanges

Suppose the accompanying graph depicts a market for one pound bags of candy. Place the line labeled Excess Demand at a price that would generate an excess demand, or shortage. Then, determine the size of the excess demand

line is at 3, Excess Demand = 4 million bags

Recently, a series of studies have demonstrated the considerable beneficial health effects of food and drink derived from the amaranth plant. This has affected consumer tastes for amaranth flour, pods, root, etc. At the same time, particularly favorable weather has resulted in a bumper crop of amaranth plants. Show the impact of these changes by properly shifting the appropriate curve or curves in the graphs.

they both shift left; Equilibrium quantity must increase, but equilibrium price could increase, decrease, or stay the same.