EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.13P
To determine
(a)
Impact of change in income on the
To determine
(b)
Impact of change in income on the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The demand function of good 1 is given by
D = D(P₁, P2, y)
where p₁ is the price of good 1, p2 the price of a related good, and y consumer's
income. The supply function of good 1 is
S = S(P1, P2)
Carry out a general comparative-statics analysis of the effects of p2 and y on
the equilibrium price of good 1.
Consider a farmer that produces both white and brown
rice. It is discovered that the demand for brown rice is
relatively more inelastic compared to the demand for
white rice. Initially the price of both white and brown
rice is the same and the farmer produces the same
quantity of white and brown rice. Now there is an
improvement in agricultural technologies that affect
both white and brown rice equally. Employ the demand
and supply model to compare and contrast the effects
on the equilibrium price and quantity of both white and
brown rice from the technological improvement.
Explain the effects on the farmer's revenue from both
types of rice after the change in technology and
support your answers with one suitable market
diagram. In addition, discuss the situation where the
improvement in technology may be detrimental to the
producers. Please provide one suitable market diagram
Change in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right.
Analysis: The shift in the demand curve to the right led to an increase in both the equilibrium price and quantity of fertilizer. Farmers, responding to the higher demand for their crops, needed more fertilizer to enhance crop yields. As a result, fertilizer suppliers saw an increase in demand for their products.
Could you bring me the graph?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Chapter 1 Solutions
EBK MICROECONOMICS
Ch. 1 - Prob. 1RECh. 1 - Prob. 2RECh. 1 - Prob. 3RECh. 1 - Prob. 4RECh. 1 - Prob. 5RECh. 1 - Prob. 6RECh. 1 - Prob. 7RECh. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3P
Ch. 1 - Prob. 1.4PCh. 1 - Prob. 1.5PCh. 1 - Prob. 1.6PCh. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Prob. 1.10PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13PCh. 1 - Prob. 1.14PCh. 1 - Prob. 1.15PCh. 1 - Prob. 1.16PCh. 1 - Prob. 1.17PCh. 1 - Prob. 1.18PCh. 1 - Prob. 1.19PCh. 1 - Prob. 1.20PCh. 1 - Prob. 1.21P
Knowledge Booster
Similar questions
- Change in Demand Determinants: The PRC's increased demand for US crop products, such as corn and soybeans, directly impacted the fertilizer market. This change in the demand for final crop products (a non-price determinant of fertilizer demand) caused a shift in the fertilizer demand curve to the right. As a result, the demand for fertilizer increased. This can be represented on a graph by shifting the demand curve to the right. Could you bring me the graph?arrow_forwardOver the past 20 years, the average price of avocados has more than doubled. Assume that the price of avocados is determined by the forces of supply and demand. Using concepts that you have learned about supply and demand, explain whether the following is or is not a cause of the increase in price of avocado. Restrictions on imports of avocados from Mexico were gradually lifted. Improved production methods allowed for slower ripening of avocados and therefore more avocados can be reliably shipped. Mexican food, which regularly features avocados, has become more popular.arrow_forwardSuppose you are modeling the market for puzzles. Based on the determinant change listed below, determine what happens to the equilibrium price and equilibrium quantity for each scenario. Card games, a replacement for puzzles, become cheaper. Equilibrium Price Increase: Equilibrium Quantity Decrease Equilibrium Price Decrease: Equilibrium Quantity Increase Equilibrium Price Increase; Equilibrium Quantity Increase Equilibrium Price Decrease; Equilibrium Quantity Decrease Equilibrium Price change is indeterminate: Equilibrium Quantity change is indeterminate OOOarrow_forward
- Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. Initially, the price of natural gas is $10 per 1,000 cubic feet, the price of an oil furnace is $2,000, the average annual household income is $40,000, the cost of crude oil is $25 per barrel of heating oil, and the cost of refining oil is $15 per barrel of heating oil. The equilibrium…arrow_forwardAssuming hypothetical equilibrium in Demand/Supply Model of Apples, illustrate impact of following events:Suppose the Doctors recommend eating Apples every morning. The Monsoon rains adversely affect the Apple Harvest. The government announces increase in Wages of workers. The price of petrol in the market comes down. Consumers Income falls during government imposed Lockdowns due to health concerns. Given below is the Supply Schedule of Nestle Milk per liter:Price of Milk per liter (in Rs) 100 200 300 400Quantity Supplied per day in liters (in 1000s) 100 200 300 400Use the above data to illustrate the Supply Curve in a graph with complete labels. Assume Rs. 200 is the original price of milk per liter and 200,000 liters is the original quantity of supply. Suppose the price rises from Rs. 200 to Rs. 300, what will be the amount of Quantity Supplied?Illustrate the impact of (C) on the graph. Is this a movement along the supply curve or shift of the curve?arrow_forwardSuppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do so, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating oil). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to the graph parameters. (Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) PRICE (Dollars per barrel) 80 70 60 50 40 30 20 10 0 0 Market for Heating Oil Supply Demand 20 40 60 80 100 120 140 160 QUANTITY (Thousands of barrels…arrow_forward
- 2. Suppose D0 and S0 are the initial demand and supply curves for tablets. P0* and Q0* are respectively the initial equilibrium price and initial equilibrium quantity in the market for tablets. Rapid economic growth over the last three years has substantially increased the disposable income of most households. Using comparative statics, analyze how the equilibrium price and equilibrium quantity in the market for tablets will change as a result of the increase in disposable income. Be sure to illustrate your answer with graph.arrow_forwardDS Determinants of supply The following calculator shows the supply curve for sedans in an imaginary market. For simplicity, assume that all sedans are identical and sell for the same price. Two factors that affect the supply of sedans are the level of technical knowledge-in this case, the speed with which manufacturing robots can fasten bolts, or robot speed-and the wage rate that auto manufacturers must pay their employees. Initially, the graph shows the supply curve when robots can fasten 2,500 bolts per hour and autoworkers earn $25 per hour. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Thousands of dollars) 8 20 10 0 0 Supply 100 200 300 400 500 600 700 800 900 QUANTITY (Sedans per month) Graph Input Tool Supply for Sedans Price of a Sedan (Thousands of…arrow_forwardWith relevant example, draw the initial and post market equilibrium of what an increase in the demand for hand soaps and sanitizer will look likearrow_forward
- Please label which part of the question (a, b, or c) that you are answering. This question asks you to perform a comparative statics analysis in the market for hot chocolate. The following diagram depicts the market for hot chocolate. P Q SIarrow_forwardUsing demand and supply analysis, graphically illustrate how the equilibrium price and quantity will change under the two following scenarios. Be certain to properly label your graphs. a) Market for biogas: Over the past year, the number of houses in one country using bio gas for heating increases while the number of companies producing biogas decreases. b) Market for instant noodle (an “inferior” good): Over the past year, the average income in one country rose by 5% while the union of instant noodle company leaders managed to gain large wage increases for their workers.arrow_forwardConsider the market for pens. Suppose that increased medical concems over lead pencils have led schools to steer away from pendl use In favor of pens. Moreover, the price of ink, an important input in pen production, has increased considerably. On the following graph, labeled Scenario 1, indicate the effect these two events have on the demand for and SUpply of pens. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Scenario 1 10 -0- 9 Supply Demand 8 Supply Demand 10 7 3 4 QUANTITY (MIllions of pens) 5 6 MacBook Air FIV F10 F7 吕0 F3 DO0 F4 F5 PRICE (Dollars per pen)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc