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Macroeconomics Hubbard Homework

Macroeconomics Hubbard Homework

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Published by Maria Vega
Demand and Supply Schedule
Demand and Supply Schedule

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Published by: Maria Vega on Apr 16, 2011
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Maria Vega 10-0066 Where Prices come From: 1.1What is demand schedule?

A table showing the relationship between the price of a product and the quantity of the product demanded What is demand curve? A curve that shows the relationship between the price of a product and the quantity of the product demanded. 1.3 What is the difference between a change in demand and a change in quantity demanded? A shift of a demand curve is an increase or a decrease in demand. A movement along a demand curve is an increase or a decrease in the quantity demanded. 1.5 Which are substitutes and which are substitutes, complements or unrelated. A) Coke and PepsiSubstitutes B) Oscar Mayer hot dogs and wonder hot dog buns. Complements C) Jiff peanut butter and Smackers Jelly. Complements D) IPod·s and TI calculators. Unrelated 1.7 State if it would cause a shift or a big movement in the Mac Donald·s demand curve. a) The price of BK burger declines.The demand curve would shift to the left from D2 to D1. b) MC distributes coupons of 1.00 off purchase. A movement down c) Price of French fries increases. The demand curve would shift to the left from D2 to D1. d) KFC raises their price in chicken. Will shift to the right from D1 to D2. 1.9Does this data show that the demand curve of Ford Explorers is upward sloping? Explain It does not indicate that the demand curve for Ford Explorers is upward sloping. Probably other factors like fuel prices, and income have varied through the years. 2.1 What is supply schedule? A table that shows the relationship between the price of a product and the quantity of the product supplied. What is supply curve?A curve that shows the relationship between the price of a product and the quantity of the product supplied. 2.3 a. Change in supply: b. Change in supply: c. Change in supply: 2.5 If the price of good increases, is the increase in the quantity of the good supplied likely to be smaller or larger, the longer the time period being considered? The increase in the quantity of goods supplied is likely to be bigger the more the time period lasts. As time passes firms can increase the quantity that they supply if the demand or price increases. 3.1 What do economists mean by market equilibrium? A situation in which quantity demanded equals quantity supplied. 3.3 Do you agree with the following statement? No I disagree. When a good is scarce equilibrium will be at a higher price because firms will raise their prices of the scarce good leading to a higher demand. Therefore equilibrium shifts higher.

3.5 Briefly explain under what conditions zero would be the equilibrium quantity? Zero would be the equilibrium quantity if the supply curve is always above the demand curve. 4.1 Draw a demand and supply curve to show the effect. a) The demand curve shifts to the right.The first graph shows that when the demand curve moves to the right, the equilibrium price and equilibrium quantity also increases.

b) The supply curve shifts to the left. The second graph shows that when the supply curve moves to the left the equilibrium price increases but the equilibrium quantity decreases.

4.3

4.5 The rise in the supply of watermelon in the summer is even bigger, so the equilibrium price falls.The demand for watermelon rise in the summer compared with the demand in spring.

4.7

4.9

4.11 4.13 Do you agree with his reasoning? No Increased production leads to a lower price, which increases the quantity demanded. The demand curve does not shift. 4.15 1.=A 2.=D 3.=C 4.=B

4.17 If the supply curve rises the equilibrium quantity will decrease.

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