EOC3: End of Chapter Problems - Ch. 3: Supply and Demand

Let's assume that each person in the United States consumes an average of 31 gallons of soft drinks (non-diet) at an average price of $2.00 per gallon, and that the U.S. population is 299 million. At a price of $1.50 per gallon, each consumer would demand 54 gallons of soft drinks. From this information about the individual demand schedule, calculate the market demand schedule for soft drinks for prices of $1.50 and $2.00 per gallon. Determine the market quantity demanded in millions of gallons at a price of $1.50 per gallon. Determine the market quantity demanded in millions of gallons at a price of $2.00 per gallon.

299*54= 16,146 million gallons 299*31=9269 million gallons

"Apple increases supply of watches following an unexpected increase in demand." Why is this statement misleading?

Apple increased the quantity supplied, which is not the same as "supply."

In the accompanying diagrams, show how the market for newspapers in your town changes, given the following events. Shift the appropriate curve and move point E to the new equilibrium. Case 1: The salaries of journalists rise. Case 2: A big news event in your town is reported in the newspapers.

Case 1: S Line moves left 1, D Line stays, E point moves to new intersection. Case 2: S Line stays, D Line moves right 1, E point moves to new intersection.

In the accompanying diagrams, show how the market for Seattle Seahawks cotton T-shirts changes, given the following events. Shift the appropriate curve and move point E to the new equilibrium. Case 1: The Seahawks win the Super Bowl. Case 2: The price of cotton increases.

Case 1: S Line stays, D Line moves right 1, E point moves to new intersection. Case 2: S Line moves left 1, D Line stays, E point moves to new intersection.

In the accompanying diagrams, show how the market for the Krugman and Wells economics textbook changes, given the following events. Shift the appropriate curve and move point E to the new equilibrium. Case 1: Your professor makes it required reading for all of his or her students. Case 2: Printing costs for textbooks are lowered by the use of synthetic paper.

Case 1: S Line stays, D Line moves right 1, E point moves to new intersection. Case 2: S Line moves right 1, D Line stays, E point moves to new intersection.

In the accompanying diagrams, show how the market for bagels changes, given the following events. Shift the appropriate curve and move point E to the new equilibrium. Case 1: People realize how fattening bagels are. Case 2: People have less time to make themselves a cooked breakfast.

Case 1: S Line stays, D Line moves right 1, E point moves to new intersection. Case 2: S Line stays, D Line moves left 1, E point moves to new intersection.

Suppose that the supply and demand schedule for Maine lobsters is as follows: Draw the demand curve and the supply curve for Maine lobsters. What are the equilibrium price and quantity of lobsters? Equilibrium Price: $ Equilibrium Quantity:

Graph: S Line Start (400, 5), (600, 15), (800, 25), D Line Start (200, 25), (600, 15), (1000, 5) $15 600

The market for many goods changes in predictable ways according to the time of year, in response to events such as holidays, vacation times, seasonal changes in production, and so on. For the following case, shift the supply and demand curves in the graph below and move the equilibrium point to its new position. Note that supply and demand may shift simultaneously. Case: The price of a round-trip ticket to Paris on Air France falls by more than $200 after the end of school vacation in September. This happens despite the fact that generally worsening weather increases the cost of operating flights to Paris, and Air France, therefore, reduces the number of flights to Paris at any given price. Graph:

S Line moves left, D Line moves left 2 or 3?, E point moves to new intersection.

The market for many goods changes in predictable ways, according to the time of the year, in response to events such as holidays, vacation times, seasonal changes in production, and so on. For the following case, shift the supply and demand curves in the graph below to account for the change in price and move the equilibrium point to its new position. Note that supply and demand may shift simultaneously. Case: The accompanying graph represents a hypothetical market for lobster. Lobster prices usually fall during the summer peak lobster harvest season, despite the fact that people like to eat lobster during the summer more than at any other time of year. Graph

S Line moves right twice, D Line moves right once, E point moves to new intersection.

The market for many goods changes in predictable ways, according to the time of year, in response to events such as holidays, vacation times, seasonal changes in production, and so on. For the following case, shift the supply and demand curves in the graph below and move the equilibrium point to its new position. Note that supply and demand may shift simultaneously. Case: The price of a Christmas tree is lower after Christmas than before, but fewer trees are sold.

S Line stays, D Line moves left, E point moves to new intersection.

Suppose that the supply and demand schedule for Maine lobsters is as follows: Now, Both U.S. and French consumers can buy Maine lobsters. a. Draw the demand curve and the supply curve for Maine lobsters. What are the equilibrium price and quantity of lobsters? Equilibrium Price: $ Equilibrium Quantity: b. This equilibrium price is _____________ than the price would be if only U.S. consumers could buy Maine lobsters.

a. ??? $ 20 700

In the market for automobiles, explain how demand responds to the following scenarios. a. An increase in the price of automobiles today b. An expected increase in the future price of automobiles

a. Quantity demanded will decrease. b. The demand curve will shift to the right.

In each of the following, what is the mistake that underlies the statement? Explain the mistake in terms of supply and demand and the factors that influence them. a. Consumers are illogical because they are buying more Starbucks beverages in 2019 despite the fact that Starbucks has raised prices 10 to 30 cents per drink. b. Consumers are illogical because they buy less at Cost-U-Less Warehouse Superstore when their incomes go up. c. Consumers are illogical for buying an iPhone 12 when an iPhone X costs less.

a. The statement doesn't consider that the increase in demand caused an increase in price. b. The statement doesn't consider that Cost-U-Less goods are inferior goods, so this follows economic intuition. c. The statement doesn't consider that tastes and preferences factor into demand curves.

Two students are debating the effects of an expected decline in future home prices. Student 1 claims that a decline in home prices will increase the total quantity of homes bought and sold while student 2 claims that the quantity of homes bought and sold will decline. a. Which student is correct? b. What do we know will happen without ambiguity? c. On the graph, demonstrate one of the possible outcomes of an expected decline in future home prices. Assume equal shifts in curves.

a. Without knowing the magnitude of the shifts, we cannot tell whether equilibrium quantity increases or decreases. b. Equilibrium price will decrease. c. Move every part down keeping the same ratio.

A study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. Now, suppose a severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. Indicate the possible effects on demand, supply, or both, as well as the equilibrium price and quantity of chocolate ice cream. a. The demand curve for chocolate ice cream b. The supply curve for chocolate ice cream c. The equilibrium price of chocolate ice cream d. The equilibrium quantity of chocolate ice cream

a. does not shift. b. shifts to the left. c. increases. d. decreases.

A study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. Suppose new technology for mixing and freezing ice cream lowers manufacturers' costs of producing chocolate ice cream. Indicate the possible effects on demand, supply, or both, as well as on the equilibrium price and quantity of chocolate ice cream. a. The demand curve for chocolate ice cream b. The supply curve for chocolate ice cream c. The equilibrium price of chocolate ice cream d. The equilibrium quantity of ice cream

a. does not shift. b. shifts to the right. c. decreases. d. increases.

A study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. Suppose improvements in the processing and freezing of strawberries lowers the price of strawberry ice cream. Indicate the possible effects on demand, supply, or both, as well as on the equilibrium price and quantity of chocolate ice cream. a. The demand curve for chocolate ice cream b. The supply curve for chocolate ice cream c. The equilibrium price of chocolate ice cream d. The equilibrium quantity of ice cream

a. shifts to the left. b. does not shift. c. decreases. d. decreases.

A study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. Suppose a new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. Indicate the possible effects on demand, supply, or both, as well as the equilibrium price and quantity of chocolate ice cream. a. The demand curve for chocolate ice cream b. The supply curve for chocolate ice cream c. The equilibrium price of chocolate ice cream d. The equilibrium quantity of chocolate ice cream

a. shifts to the right. b. does not shift. c. increases. d. increases.

In the accompanying supply and demand diagram depicting the market for hamburgers in your hometown, first shift the demand curve, given the event described. Then, move the equilibrium point to its new position. What is the effect on equilibrium price and quantity? Event: All hamburger sellers raise the price of their french fries. Equilibrium price Equilibrium quantity Graph:

decreases. decreases. S Line stays, D Line moves left, E point moves to new intersection.

In the accompanying supply and demand diagram, depicting the market for hamburgers in your hometown, first shift the demand curve, given the event described. Then, move the equilibrium point to its new position. What is the effect on equilibrium price and quantity? Hot dog stands cut the price of hot dogs. Assume hot dogs and hamburgers are not substitutes in production. Equilibrium price Equilibrium quantity Graph:

decreases. decreases. S Line stays, D Line moves left, E point moves to new intersection.

In the accompanying supply and demand diagram, depicting the market for hamburgers in your hometown, first shift the demand curve, given the event described. Then, move the equilibrium point to its new position. What is the effect on the equilibrium price and quantity? Event: Income falls. Assume that hamburgers are a normal good for most people. Equilibrium price Equilibrium quantity Graph:

decreases. decreases. S Line stays, D Line moves left, E point moves to new intersection.

Find the flaw in reasoning in the following statement, paying particular attention to the distinction between shifts of and movements along the supply and demand curves. In the accompanying diagram, shift the demand and/or supply curves and move the equilibrium point to its new position to illustrate what actually occurs in each situation. A technological innovation that lowers the cost of producing a good might seem at first to result in a reduction in the price of the good to consumers. But a fall in price will increase demand for the good, and higher demand will send the price up again. It is not certain, therefore, that an innovation will really reduce price in the end. he statement

didn't have enough time

In the accompanying supply and demand diagram, depicting the market for hamburgers in your hometown, first shift the demand curve, given the event described. Then move the equilibrium point to its new position. What is the effect on equilibrium price and quantity? Event: The price of tacos increases. Equilibrium price Equilibrium quantity Graph:

increases. increases. S Line stays, D Line moves right, E point moves to new intersection.

In the accompanying supply and demand diagram, depicting the market for hamburgers in your hometown, first shift the demand curve, given the event described. Then, move the equilibrium point to its new position. What is the effect on the equilibrium price and quantity? Event: Income falls. Assume that hamburgers are an inferior good for most people. Equilibrium price Equilibrium quantity Graph:

increases. increases. S Line stays, D Line moves right, E point moves to new intersection.