Answers Problems Chapter 4 Principles of Economics - Mankiw
4 | | | | | | THE MARKET FORCES OF SUPPLY AND DEMAND | | |
OF SUPPLY AND DEMAND
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SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. A market is a group of buyers (who determine demand) and a group of sellers (who determine supply) of a particular good or service. A perfectly competitive market is one in which there are many buyers and many sellers of an identical product so that each has a negligible impact on the market price. 2. Here is an example of a monthly demand schedule for pizza: Price of Pizza Slice | Number of Pizza Slices Demanded | $ 0.00 | 10 | 0.25 | 9 | 0.50 | 8 | 0.75 | 7 | 1.00 | 6 | 1.25 | 5 | 1.50 | 4 | 1.75 | 3 | 2.00 | 2 | 2.25 | 1 | 2.50 | 0 | The demand curve is graphed in Figure 1.
Figure 1 Examples of things that would shift the demand curve include changes in income, prices of related goods like soda or hot dogs, tastes, expectations about future income or prices, and the number of buyers. A change in the price of pizza would not shift this demand curve; it would only lead to a movement from one point to another along the same demand curve. 3. Here is an example of a monthly supply schedule for pizza: Price of Pizza Slice | Number of Pizza Slices Supplied | $ 0.00 | 0 | 0.25 | 100 | 0.50 | 200 | 0.75 | 300 | 1.00 | 400 | 1.25 | 500 | 1.50 | 600 | 1.75 | 700 | 2.00 | 800 | 2.25 | 900 | 2.50 | 1000 | The supply curve is graphed in Figure 2.
Figure 2 Examples of things that would shift the supply curve include changes in prices of inputs like tomato sauce and cheese, changes in technology like more efficient pizza ovens or automatic dough makers, changes in expectations about the future price of pizza, or a change in the number of sellers. A change in the price of pizza would not shift this supply curve; it would only lead to a movement from
OF SUPPLY AND DEMAND
| | |
SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. A market is a group of buyers (who determine demand) and a group of sellers (who determine supply) of a particular good or service. A perfectly competitive market is one in which there are many buyers and many sellers of an identical product so that each has a negligible impact on the market price. 2. Here is an example of a monthly demand schedule for pizza: Price of Pizza Slice | Number of Pizza Slices Demanded | $ 0.00 | 10 | 0.25 | 9 | 0.50 | 8 | 0.75 | 7 | 1.00 | 6 | 1.25 | 5 | 1.50 | 4 | 1.75 | 3 | 2.00 | 2 | 2.25 | 1 | 2.50 | 0 | The demand curve is graphed in Figure 1.
Figure 1 Examples of things that would shift the demand curve include changes in income, prices of related goods like soda or hot dogs, tastes, expectations about future income or prices, and the number of buyers. A change in the price of pizza would not shift this demand curve; it would only lead to a movement from one point to another along the same demand curve. 3. Here is an example of a monthly supply schedule for pizza: Price of Pizza Slice | Number of Pizza Slices Supplied | $ 0.00 | 0 | 0.25 | 100 | 0.50 | 200 | 0.75 | 300 | 1.00 | 400 | 1.25 | 500 | 1.50 | 600 | 1.75 | 700 | 2.00 | 800 | 2.25 | 900 | 2.50 | 1000 | The supply curve is graphed in Figure 2.
Figure 2 Examples of things that would shift the supply curve include changes in prices of inputs like tomato sauce and cheese, changes in technology like more efficient pizza ovens or automatic dough makers, changes in expectations about the future price of pizza, or a change in the number of sellers. A change in the price of pizza would not shift this supply curve; it would only lead to a movement from