Chapter 4, Supply and Demand Video Solutions, Macroeconomics

Problem 1

State the law of demand. Why is price inversely related to quantity demanded? LO1, LO2

Check back soon!

You're given the following individual demand tables for comic books.
$$
\begin{array}{rccc}
\hline \text { Price } & \text { John } & \text { Liz } & \text { Alex } \\
\hline \$ 2 & 4 & 36 & 24 \\
4 & 4 & 32 & 20 \\
6 & 0 & 28 & 16 \\
8 & 0 & 24 & 12 \\
10 & 0 & 20 & 8 \\
12 & 0 & 16 & 4 \\
14 & 0 & 12 & 0 \\
16 & 0 & 8 & 0 \\
\hline
\end{array}
$$
a. Determine the market demand table.
b. Graph the individual and market demand curves.
c. If the current market price is $$\$ 4$$, what's total market demand? What happens to total market demand if price rises to $$\$ 8$$ ?
d. Say that an advertising campaign increases demand by 50 percent. What will happen to the individual and market demand curves? LO1

Rylie Howey

Numerade Educator

Problem 3

List four shift factors of demand and explain how each affects demand. LO3

Check back soon!

02:12

Problem 4

Distinguish the effect of a shift factor of demand on the demand curve from the effect of a change in price on the demand curve. $\mathrm{LO} 3$

Kaylee Mcclellan

Numerade Educator

Problem 5

State the law of supply. Why is price directly related to quantity supplied? LO4

Check back soon!

01:49

Problem 6

Mary has just stated that normally, as price rises, supply will increase. Her teacher grimaces. Why? LO4

Xiaomin Bian

Numerade Educator

03:05

Problem 7

List four shift factors of supply and explain how each affects supply. LO5

Daniel Cisneros

Numerade Educator

Problem 8

Derive the market supply curve from the following two individual supply curves. LO5
(GRAPH CANT COPY)

Check back soon!

01:53

Problem 9

You're given the following demand and supply tables:
(COLUMNS CANT COPY)
a. Draw the market demand and market supply curves.
b. What is excess supply/demand at price $$\$ 30$$ ? Price $$\$60$$?
c. Label equilibrium price and quantity. LO6

Crystal Wang

Numerade Educator

02:47

Problem 10

It has just been reported that eating red meat is bad for your health. Using supply and demand curves, demonstrate the report's likely effect on the equilibrium price and quantity of steak sold in the market. LO7

Jesse Leija

Numerade Educator

View

Problem 11

Why does the price of airline tickets rise during the summer months? Demonstrate your answer graphically. LO7

James Kiss

Numerade Educator

View

Problem 12

Why does sales volume rise during weeks when states suspend taxes on sales by retailers? Demonstrate your answer graphically. LO7

James Kiss

Numerade Educator

Problem 13

What is the expected impact of increased security measures imposed by the federal government on airlines on fares and volume of travel? Demonstrate your answer graphically. (Difficult) LO7

Check back soon!

00:54

Problem 14

Explain what a sudden popularity of "Economics Professor" brand casual wear would likely do to prices of that brand. LO7

Omkar Katta

Numerade Educator

Problem 15

In a flood, usable water supplies ironically tend to decline because the pumps and water lines are damaged. What will a flood likely do to prices of bottled water? LO7

Check back soon!

00:29

Problem 16

The price of gas shot up significantly in 2008 to over $$\$ 4.00$$ a gallon. What effect did this likely have on the demand for diesel cars that get better mileage than the typical car? LO7

Erika Bustos

Numerade Educator

Problem 17

OPEC announces it will increase oil production by 20 percent. What is the effect on the price of oil? Demonstrate your answer graphically. LO7

Check back soon!

02:35

Problem 18

Draw hypothetical supply and demand curves for tea. Show how the equilibrium price and quantity will be affected by each of the following occurrences:
a. Bad weather wreaks havoc with the tea crop.
b. A medical report implying tea is bad for your health is published.
c. A technological innovation lowers the cost of producing tea.
d. Consumers' income falls. (Assume tea is a normal good.) LO7

Crystal Wang

Numerade Educator

12:39

Problem 19

You're a commodity trader and you've just heard a report that the winter wheat harvest will be 2.09 billion bushels, a 44 percent jump, rather than an expected 35 percent jump to 1.96 billion bushels. (Difficult)
a. What would you expect would happen to wheat prices?
b. Demonstrate graphically the effect you suggested in $a$. LO7

Oluwadamilola Ameobi

Numerade Educator

03:13

Problem 20

In the United States, say gasoline costs consumers about $$\$ 2.50$$ per gallon. In Italy, say it costs consumers about $$\$ 6$$ per gallon. What effect does this price differential likely have on
a. The size of cars in the United States and in Italy?
b. The use of public transportation in the United States and in Italy?
c. The fuel efficiency of cars in the United States and in Italy?
d. What would be the effect of raising the price of gasoline in the United States to $$\$ 4$$ per gallon? LO7

Jennifer Stoner

Numerade Educator

02:10

Problem 21

In 2004, Argentina imposed a 20 percent tax on natural gas exports.
a. Demonstrate the likely effect of that tax on gas exports using supply and demand curves.
b. What did it likely do to the price of natural gas in Argentina? LO7

Andrew Davis

Numerade Educator

01:07

Problem 22

In most developing countries, there are long lines of taxis at airports, and these taxis often wait two or three hours. What does this tell you about the price in that market? Demonstrate with supply and demand analysis. LO7

Achintya Suden

Numerade Educator

04:51

Problem 23

Define the fallacy of composition. How does it affect the supply/demand model? LO8

Arrushi Agarwal

Numerade Educator

01:45

Problem 24

In which of the following three markets are there likely to be the greatest feedback effects: market for housing, market for wheat, market for manufactured goods? LO8

Kaylee Mcclellan

Numerade Educator

09:25

Problem 25

State whether supply/demand analysis used without significant modification is suitable to assess the following:
a. The impact of an increase in the demand for pencils on the price of pencils.
b. The impact of an increase in the supply of labor on the quantity of labor demanded.
c. The impact of an increase in aggregate savings on aggregate expenditures.
d. The impact of a new method of producing CDs on the price of CDs. LO8

Ansh Varma

Numerade Educator