ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 4, Problem 4.8PA
To determine
Effect on the
Concept Introduction:
Equilibrium price refers to the price where the quantity supplied of the good equals the quantity demanded of the good.
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14. Understanding changes in equilibrium price and quantity
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 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 (Dollar per barrel)
8 28 28 2 20
80
70
60
50
40
30
20
++
0
Market for Heating Oil
1
1…
A. Keeping all other factors constant, graphically show the effects of the
following on the demand for sugar. Below each graph, indicate whether there
is an increase or decrease in demand/quantity demanded.
1. The population expects that there will be 2. The price of coffee goes up
shortage of sugar one month from now
3. The population consumes more
nutrasweet (a sugar substitute)
4. The price of sugar goes down
(Figure: The Supply of Apple TV Rentals) Use Figure: The Supply of Apple TV Rentals. An increase in the price of online
movie rentals would result in the change illustrated by the move from:
Price of
Apple TV
rental
0
Price of
Apple TV
rental
n
(a)
Quantity (per period)
(c)
Quantity (per period)
Price of
Apple TV
rental
Price of
Apple TV
rental.
0
(b)
S₂
S₁
Quantity (per period)
(d)
Quantity (per period)
Chapter 4 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
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Similar questions
- 3. Understanding changes in equilibrium price and quantity 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 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 Market for Heating Oil + 1 1 1 I Supply…arrow_forwardChapter 3 Review Quantity Figure 3-1 6. Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a (n): A. increase in quantity demanded. B. decrease in quantity demanded. C. increase in demand. D. decrease in demand. Pricearrow_forward6) Ilustrate the law of Demand by showing the differences between the changes of quantity demanded and the changes of demand? (Give example by using diagram)arrow_forward
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- 11.An increase in demand occurs when the demand curve shifts upward and to the right. there is a leftward shift in the demand curve. quantity demanded is greater than quantity supplied. quantity supplied is greater that quantity demanded.arrow_forward6. Shifts in supply or demand I The following graph shows the market for cereal in Detroit, where there are over a thousand stores that sell cereal at any given moment. Suppose the price of breakfast bars increases. (Assume that people regard cereal and breakfast bars as substitutes.) Show the effect of this change on the market for cereal by shifting one or both of the curves on the following graph, holding all else constant. PRICE (Dollars per box) QUANTITY (Boxes) Supply Demand Demand 0 Supplyarrow_forwardPrice (dollars per pizza) S S2 Quantity (millions of pizzas per year) n the above figure, the shift in the supply curve from S to S1 reflects A) an increase in the quantity of pizza supplied. B) a decrease in the quantity of pizza supplied. C) an increase in the supply of pizza. D) a decrease in the supply of pizza. F)arrow_forward
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