Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 8, Problem 8.4IP
(a)
To determine
The new
(b)
To determine
The new equilibrium with rapid
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The demand for rice is given by Q d=20-p and the supply is Q s=3p-20.
a. Draw the demand and supply functions. Find the equilibrium quantity and price, and show them on the graph.
b. Suppose due to drought the supply changes to 3p-30. The supply remains the same. Draw the new supply function on the same graph, and find the new equilibrium price and quantity. Has the demand increased or decreased? How did the equilibrium price and quantity change compared to part a.?
Begin with the market for chocolate in equilibrium. What will happen to the supply of chocolate if producers and consumers
expect the price of chocolate to rise in the future? Will the supply of chocolate increase, decrease, or stay the same if
producers expect prices to rise in the future?
A increase
B decrease
C) stay the same
Begin with the market for chocolate in equilibrium. What will happen to the demand of chocolate if producers and
consumers expect the price of chocolate to rise in the future? Will the demand of chocolate increase, decrease, or stay the
same if consumers expect prices to rise in the future?
A increase
B
decrease
stay the same
Chapter 8 Solutions
Managerial Economics: A Problem Solving Approach
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- Assume that Figure shows the market for potatoes. Which of the following will most likely cause a shift from D1 to D2? a) The introduction of more resilient, genetically modified potatoes. b) A decrease in the price of sour cream. c) A decrease in the price of potatoes. d) A decrease in the price of rice.arrow_forwardConsider the market supply of wine. Complete the following table by indicating whether an event will cause a movement along the supply curve for wine or a shift of the supply curve for wine, holding all else constant. Event Movement Along Shift A decrease in the price of wine An increase in the price of grapes (used in the production of wine) A decrease in the number of producersarrow_forwardConsider the market supply of cereal. Complete the following table by indicating whether an event will cause a movement along the supply curve for cereal or a shift of the supply curve for cereal, holding all else constant. Event Movement Along Shift A decrease in the price of cereal A change in technology that makes it less costly to produce cereal A decrease in the price of oats (used in the production of cereal)arrow_forward
- Price si S2 C D2 D1 Quantity Which of the following would result in equilibrium shifting from point C to point A?arrow_forwardDraw a demand and supply graph for each of the following questions. For each question, start by drawing a correctly labeled graph of the market for cookies in equilibrium. Your starting graphs should each have correctly labeled axes and demand and supply curves. Label the equilibrium price and quantity as p1 and p2 on the axes of each of the starting graphs. Show the effect on the equilibrium price and quantity in the market for cookies if the price of flour decreases. Determine which curve is affected by the change in the price of flour and whether it increases or decreases. On your graph, draw a new curve indicating the shift—either to the right or the left. Label the new equilibrium price and quantity as p2 and q2.arrow_forwardMovements along versus shifts of demand curves Consider the market demand for wine. Complete the following table by indicating whether an event will cause a movement along the demand curve for wine or a shift of the demand curve for wine, holding all else constant. Event Movement Along Shift An increase in the number of consumers A decrease in the price of wine An increase in income of consumersarrow_forward
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