Ch 4 Questions (ECON)

Does a change in consumers' tastes lead to a movement along the demand curve or to a shift in the demand curve?

A change consumers' taste will only shift the demand curve, while a change in the price of the good itself will represent a movement along the demand curve. A curve shifts when there is a change in a relevant variable that is not measured on either axis.

What is a competitive market? Briefly describe a type of market that is not perfectly competitive.

A competitive market is one in which there are many buyers and many sellers so that each has a negligible impact on the market price. If a seller were to change their price, their buyers are likely to switch sellers. No single seller can impact the market price in a competitive market. Monopolies and oligopolies can create imperfect competitive markets. Along with this, imperfect competitive markets can be caused by only having one seller where this seller sets the price, such as a local television station.

Does a change in price lead to a movement along the demand curve or to a shift in the demand curve?

A curve shifts when there is a change in a relevant variable that is not measured on either axis. Because price is on the vertical axis, a change in price represents a movement along the demand curve.

What are the demand schedule and the demand curve, and how are they related?

A demand schedule is a table that shows the relationship between the price of a good and the quantity demanded, while a demand curve is a graph of that same information.

Beer and pizza are complements because they are often enjoyed together. When the price of beer rises, what happens to the supply, demand, quantity supplied, quantity demanded, and price in the market for pizza?

As the price of beer increases, demand for pizza decreases since people buy them together. Supply for pizza would remain unchanged, demand decreases, quantity supplied decreases, quantity demanded decreases, and then the price falls. The entire demand curve for pizza has shifted to the left and therefore affected the equilibrium price and quantity of pizza, in the send reducing the quantity of pizza supplied and demanded.

Why does the demand curve slope downward?

Because a lower price increases the quantity demanded, the demand curve slopes downward.

Explain each of the following statements using supply-and-demand diagrams. a. "When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country." b. "When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts plummets." c. "When a war breaks out in the Middle East, the price of gasoline rises and the price of a used Cadillac falls."

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Define the equilibrium of a market

Equilibrium of a market is where supply and demand have been brought into balance. At this price, the quantity of a good that buyers are willing and able to buy balances with the quantity sellers are willing and able to sell.

"An increase in the demand for notebooks raises the quantity of notebooks demanded but not the quantity supplied." Is this statement true or false? Explain.

False; an increase in demand means a shift of the demand curve to the right so it will increase both price and quantity supplied. There is no shift of the supply curve.

Harry's income declines, and as a result, he buys more pumpkin juice. Is pumpkin juice an inferior or a normal good? What happens to Harry's demand curve for pumpkin juice?

In this case, pumpkin juice is an inferior good. A rise in quantity demanded at any given price will shift the demand curve to the right

Over the past 40 years, technological advances have reduced the cost of computer chips. How do you think this has affected the market for computers? For computer software? For typewriters?

It has reduced the price of computers.It has increased the quantity of computers.Each advance in technology results in a new equilibrium point. It has increased the price of computer software. Computers and typewriters are substitutes, and lower computer prices results in consumers substituting away from typewriters to computers.

Describe the role of prices in market economies.

Prices are great signals that guide economic decisions and bring the market into equilibrium. Prices can signal surplus or shortage and guide economists. Prices different from equilibrium can show a difference in supply and demand and can lead to a change in price until equilibrium is reached.

Consider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increases or decreases. Then draw a diagram to show the effect on the price and quantity of minivans. a. People decide to have more children. b. A strike by steelworkers raises steel prices. c. Engineers develop new automated machinery for the production of minivans. d. The price of sports utility vehicles rises. e. A stock market crash lowers people's wealth.

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Describe the forces that move a market toward its equilibrium

The activity of many buyers and sellers automatically pushes the market price toward the equilibrium price. Increase in demand and shortage of supply can also move the equilibrium price, but how quickly equilibrium is reached thereafter varies from market to market.

Does a change in producers' technology lead to a movement along the supply curve or to a shift in the supply curve? Does a change in price lead to a movement along the supply curve or to a shift in the supply curve?

The supply curve is very similar to the demand curve in that anything not measured on the axis (technology, input prices, expectations, number of sellers) will result in a shift in the supply curve. At the same time a change in price (on the vertical axis) will results in movement along the supply curve.

Why does the supply curve slope upward?

The supply curve slopes upward because a higher price means a great quantity supplied.

What are the supply schedule and the supply curve, and how are they related?

The supply schedule and supply curve are a table and graph respectively that show the relationship between the price of a good and the quantity supplied.

Consider the markets for film streaming services, TV screens, and tickets at movie theaters. a. For each pair, identify whether they are complements or substitutes: • Film streaming and TV screens • Film streaming and movie tickets • TV screens and movie tickets b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram to show what happens in the market for TV screens. c. Draw two more diagrams to show how the change in the market for TV screens affects the markets for film streaming and movie tickets.

a. • Film streaming and TV screens: complements • Film streaming and movie tickets: substitutes • TV screens and movie tickets: substitutes b. A change in technology can increase the production and supply of goods and services which reduces the price of a good resulting in an increase in demand for the product. The supply curve shifted to the right therefore the equilibrium price of TV screens decreased and the equilibrium quantity increased. c. (1) decrease in the price of film streaming services; shifts the demand curve to the right; increase in the equilibrium price and equilibrium quantity (2) decrease in demand for movie tickets; shifts the demand curve to the left; decrease in equilibrium quantity and price of movie tickets https://www.chegg.com/homework-help/questions-and-answers/consider-market-film-streaming-services-tv-screens-tickets-movie-theaters-pair-identify-wh-q26843982

Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts. a. A hurricane in South Carolina damages the cotton crop. b. The price of leather jackets falls. c. All colleges require morning exercise in appropriate attire. d. New knitting machines are invented.

a. The price of cotton and manufacturing cost will increase since cotton is a raw material needed. Producers will reduce the supply while demand stays the same. A decrease in supply leads to an increase in price, so the supply shifts to the left. b. Leather jackets are a substitute for sweatshirts so as their price falls, the demand for sweatshirts falls. Supply is constant and a fall in the demand for sweatshirts causes the price of them to drop. c. This will increase the demand for sweatshirts. Supply stays constant and an increase in demand will increase its price. d. This will improve production leading to an increase in supply. Demand remains constant and an increase in supply leads to a decrease in price. https://www.chegg.com/homework-help/using-supply-demand-diagrams-show-effect-following-events-ma-chapter-4-problem-6p-solution-9780538453059-exc