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