“NAME: ________________________________________ DATE: ____ / ____ / ____
CHAPTER FOUR PROBLEM SET
Give the best answer to each
of the following questions.
1. Draw a demand curve from the following demand
table on the axes below. Label it D1.
Then suppose the demander gets an increase in income and decides to buy 2 more
bars at every price level. Draw this change on your demand curve. Label it D2.
.jpg”” alt=””ch04_01″”>
Price per candy bar
Candy bars purchased
each week
$0.50
10
0.75
8
1.00
6
1.25
4
1.50
2
2. Indicate whether each of the following
statements describes an increase in demand, decrease in demand, change
in quantity demanded, increase in supply, decrease in supply,
or change in quantity supplied in the given market.
a. Store-brand soup prices are cut, reducing
sales of Campbells
soup. Market: Campbells
soup.
b.
Coffee bean prices hit an 18-month low
following a bountiful harvest. Market: coffee beans.
c. A summer heat wave leads to higher prices for
bottled water. Market: bottled water.
d. Holiday
clothing discounts boost clothing sales. Market: clothing.
e. Apple introduces a tinier and more powerful
iPod model. Market: older iPod models.
f. The cost of pesticides increases, leading to
a rise in the price of soy beans. Market: soy beans.
3. Given the following data for individuals,
draw the market demand curve and market supply curve for CDs. Assume that these
are the only individuals in the entire market. Price is per CD.
.jpg”” alt=””ch04_03″”>
Price
$8.00
$8.50
$9.00
$9.50
$10.00
$10.50
Quantity demanded in units per week
Mark
3
3
1
0
0
0
Lynn
8
7
6
3
2
1
Jason
6
5
4
3
0
0
Erin
10
9
7
6
4
2
Quantity supplied in units per week
Jeff
0
1
2
3
4
6
Beth
2
3
3
4
6
7
Chris
0
1
2
3
5
6
Abby
1
1
2
2
3
5
a. What would be the equilibrium price and
quantity in this market?
b.
Which
would there beexcess demand or
excess supplyat a price of $8.00?
How much? What about at a price of $10.00?
c. If the price of a CD was initially set at
$9.00 but the price was allowed to adjust, would the price rise or fall?
Explain your answer.
4. State the effect of the following events on
equilibrium price and quantity of the market given.
a. Beetle infestation decimates tobacco crop.
Market: cigars.
b. The Organization for Petroleum Export
Countries raises oil export quotas. Market: gasoline.
c. Digital image albums become the rage among
households while improved technology reduces the cost of producing digital
cameras. Market: digital cameras.
d. Hurricanes in the Gulf coast cause gasoline
supply disruptions while the summer travel season ends. Market: gasoline.
7. What is the fallacy of composition and how is
it related to supply and demand analysis?
NAME: ________________________________________ DATE: ____ / ____ / ____CHAPTER FOUR PROBLEM SETGive the best answer to each
of the following questions.1. Draw a demand curve from the following demand
table on the axes below. Label it D1.
Then suppose the demander gets an increase in income and decides to buy 2 more
bars at every price level. Draw this change on your demand curve. Label it D2..jpg”” alt=””ch04_01″”>Price per candy barCandy bars purchased
each week$0.50100.7581.0061.2541.5022. Indicate whether each of the following
statements describes an increase in demand, decrease in demand, change
in quantity demanded, increase in supply, decrease in supply,
or change in quantity supplied in the given market.a. Store-brand soup prices are cut, reducing
sales of Campbells
soup. Market: Campbells
soup. b.
Coffee bean prices hit an 18-month low
following a bountiful harvest. Market: coffee beans.c. A summer heat wave leads to higher prices for
bottled water. Market: bottled water. d. Holiday
clothing discounts boost clothing sales. Market: clothing. e. Apple introduces a tinier and more powerful
iPod model. Market: older iPod models.f. The cost of pesticides increases, leading to
a rise in the price of soy beans. Market: soy beans.3. Given the following data for individuals,
draw the market demand curve and market supply curve for CDs. Assume that these
are the only individuals in the entire market. Price is per CD. .jpg”” alt=””ch04_03″”>Price $8.00$8.50$9.00$9.50$10.00$10.50Quantity demanded in units per weekMark331000Lynn876321Jason654300Erin1097642Quantity supplied in units per weekJeff012346Beth233467Chris012356Abby112235a. What would be the equilibrium price and
quantity in this market?b.
Which
would there beexcess demand or
excess supplyat a price of $8.00?
How much? What about at a price of $10.00? c. If the price of a CD was initially set at
$9.00 but the price was allowed to adjust, would the price rise or fall?
Explain your answer. 4. State the effect of the following events on
equilibrium price and quantity of the market given.a. Beetle infestation decimates tobacco crop.
Market: cigars. b. The Organization for Petroleum Export
Countries raises oil export quotas. Market: gasoline. c. Digital image albums become the rage among
households while improved technology reduces the cost of producing digital
cameras. Market: digital cameras. d. Hurricanes in the Gulf coast cause gasoline
supply disruptions while the summer travel season ends. Market: gasoline. 7. What is the fallacy of composition and how is
it related to supply and demand analysis?”
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