Chapter 4 Post-Class Assignment Part II: The Market Forces of Supply and Demand

Now suppose Congress passes a new tax that decreases the income of Denver residents. If donuts are a normal good, this will cause the demand for donuts to .

decrease

Consider the market supply of donuts. Complete the following table by indicating whether an event will cause a movement along the supply curve for donuts or a shift of the supply curve for donuts, holding all else constant.

A change in expectations about the future price of donuts = shift An increase in the price of donuts= movement An increase in the number of producers= shift

The following graph shows the market for croissants in Detroit, where there are over 1,000 bakeries at any given moment. Suppose the price of flour, a major ingredient in croissants, suddenly increases. Show the effect of this change on the market for croissants by shifting one or both of the curves on the following graph, holding all else constant.

Supply curve shifts to the left

Identical products, as well as a large number of buyers and sellers, are characteristics of a market. In such markets, sellers of goods influence the prevailing market price, giving them the role of price in the market. True or False: The market for lettuce does exhibit the two primary characteristics that define perfectly competitive markets.

perfectly competitive, cannot, & takers False

The following graph shows the market for donuts in Denver, where there are over 1,000 donut shops at any given moment. Suppose the Surgeon General issues a public statement saying that consuming donuts is bad for your health. Show the effect of this change on the market for donuts by shifting one or both of the curves on the following graph, holding all else constant.

Demand curve shifts to the left

Suppose that both of the events you have just analyzed are partly responsible for the decrease in the price of calzones. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the decrease in the price of calzones?

If the equilibrium quantity of calzones decreases, then the demand shift in the market for calzones must have been larger than the supply shift.

Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of pizzas. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of pizzas?

If the equilibrium quantity of pizzas decreases, then the supply shift in the market for pizzas must have been larger than the demand shift.

Assume that the three beachfront parcels are sold to the people that you indicated in the previous section. Suppose that a few days after the last of those beachfront parcels is sold, another essentially identical beachfront parcel becomes available for sale at a minimum price of $360,000. This fourth parcel be sold, because will purchase it from the seller for at least the minimum price.

Will be & Yvette

The following graph shows the market for roses in 2010. Between 2010 and 2011, the equilibrium quantity of roses remained constant, but the equilibrium price of roses increased. From this, you can conclude that between 2010 and 2011, the supply of roses and the demand for roses .

decreased & increased

The following graph shows the market for laptops in 2009. Between 2009 and 2010, the equilibrium quantity of laptops remained constant, but the equilibrium price of laptops decreased. From this, you can conclude that between 2009 and 2010, the supply of laptops and the demand for laptops .

increased & decreased

The following graph shows the market for cars in 2008. Between 2008 and 2009, the equilibrium price of cars remained constant, but the equilibrium quantity of cars increased. From this, you can conclude that between 2008 and 2009, the supply of cars and the demand for cars . Adjust the graph to illustrate your answer by showing the positions of the supply and demand curves in 2009.

increased & decreased I guess answer is increased & increased Demand curve shifts to the right Supply curve shifts to the right

Suppose the market for cantaloupes is unregulated. That is, cantaloupe prices are free to adjust based on the forces of supply and demand. If a shortage exists in the cantaloupe market, then the current price must be than the equilibrium price. For the market to reach equilibrium, you would expect .

lower & buyers to offer higher prices

Your task is to take this and construct a graphical representation of the data. In doing so, you determine that as the price of soda rises, the quantity of soda supplied increases. This confirms the . .

supply schedule & law of supply

Because you understand the law of demand, you can deduce that the correct graphical representation of the demand for CDs must be .Moreover, you know that at a price of $10 per CD, the is five million CDs.

D1 & quantity demanded

The market price of calzones in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because the price of dough, an important ingredient for making calzones, has decreased. Other students attribute the decrease in the price of calzones to a recent decrease in college student enrollment. The second group of students attributes the decrease in the price of calzones to the decrease in college student enrollment. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the decrease in the price of calzones.

Demand curve shifts to the left

Adjust the graph to illustrate your answer by showing the positions of the supply and demand curves in 2010.

Demand curve shifts to the left Supply curve shifts to the right

The market price of pizzas in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because the price of dough, an important ingredient for making pizzas, has increased. Other students attribute the increase in the price of pizzas to a recent increase in college student enrollment. The second group of students attributes the increase in the price of pizzas to the increase in college student enrollment. On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the increase in the price of pizzas.

Demand curve shifts to the right

Adjust the graph to illustrate your answer by showing the positions of the supply and demand curves in 2011.

Demand curve shifts to the right Supply curve shifts to the left

Suppose that there are three beachfront parcels of land available for sale in Asilomar and six people who would each like to purchase one parcel. Assume that the parcels are essentially identical and that the minimum selling price of each is $400,000. The following table states each person's willingness and ability to purchase a parcel. Which of these people will buy one of the three beachfront parcels? Check all that apply.

Musashi, Rina, & Sean

The market price of pizzas in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because the price of dough, an important ingredient for making pizzas, has increased. Other students attribute the increase in the price of pizzas to a recent increase in college student enrollment. The first group of students thinks the increase in the price of pizzas is due to the fact that the price of dough, an important ingredient for making pizzas, has increased. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the increase in the price of pizzas.

Supply curve shifts to the left

The market price of calzones in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because the price of dough, an important ingredient for making calzones, has decreased. Other students attribute the decrease in the price of calzones to a recent decrease in college student enrollment. The first group of students thinks the decrease in the price of calzones is due to the fact that the price of dough, an important ingredient for making calzones, has decreased. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of calzones.

Supply curve shifts to the right