supply demand and gov policies
Principles of Economics II – Microeconomics
Homework #1: Ch 4~6 and Article Questions
Article Questions
Please download the associated article.
“Fare Hike...”
1. Based on the article, are taxi fares more elastic or less elastic for drivers? Passengers? How do you know? Give at least 3 reasons.
2. If given a chance, do you think that cab drivers would have raised the amount that high? Why/not?
Chapter Questions
Ch 4 Questions:
1. Consider the market for eggs. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether supply or demand increases or decreases. Then draw a diagram to show the effect on the price and quantity of eggs.
A. The price of grain that is fed to hens falls.
B. The price of bacon falls.
C. A new study is released that indicates that eating eggs is hazardous to one’s health.
D. The number of egg-producing farms falls.
E. This weekend is the Easter holiday.
1. a. If the price of grain used to feed hens falls, the supply of eggs will rise. Demand will not be affected. The result is a fall in the price and an increase in the quantity sold, as Figure 12 shows.
Figure 12
b. If the price of bacon falls, the demand for eggs will rise because eggs and bacon are complements. Supply will not be affected. The result is an increase in both the price of eggs and the quantity sold, as Figure 13 shows.
Figure 13
c. A new study that indicates that eating eggs is hazardous to one’s health will cause a decline in the demand for eggs. Supply is not affected. The result is a decline in the price of eggs and a decrease in the quantity sold, as Figure 14 shows.
Figure 14
d. If the number of egg-producing farms falls, the supply of eggs will decline. Demand is not affected. The equilibrium price of eggs will fall and quantity of eggs sold rises, as Figure 15 shows.
Figure 15
e. During Easter weekend, the demand for eggs rises. Supply is not affected. As a result,
Homework #1: Ch 4~6 and Article Questions
Article Questions
Please download the associated article.
“Fare Hike...”
1. Based on the article, are taxi fares more elastic or less elastic for drivers? Passengers? How do you know? Give at least 3 reasons.
2. If given a chance, do you think that cab drivers would have raised the amount that high? Why/not?
Chapter Questions
Ch 4 Questions:
1. Consider the market for eggs. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether supply or demand increases or decreases. Then draw a diagram to show the effect on the price and quantity of eggs.
A. The price of grain that is fed to hens falls.
B. The price of bacon falls.
C. A new study is released that indicates that eating eggs is hazardous to one’s health.
D. The number of egg-producing farms falls.
E. This weekend is the Easter holiday.
1. a. If the price of grain used to feed hens falls, the supply of eggs will rise. Demand will not be affected. The result is a fall in the price and an increase in the quantity sold, as Figure 12 shows.
Figure 12
b. If the price of bacon falls, the demand for eggs will rise because eggs and bacon are complements. Supply will not be affected. The result is an increase in both the price of eggs and the quantity sold, as Figure 13 shows.
Figure 13
c. A new study that indicates that eating eggs is hazardous to one’s health will cause a decline in the demand for eggs. Supply is not affected. The result is a decline in the price of eggs and a decrease in the quantity sold, as Figure 14 shows.
Figure 14
d. If the number of egg-producing farms falls, the supply of eggs will decline. Demand is not affected. The equilibrium price of eggs will fall and quantity of eggs sold rises, as Figure 15 shows.
Figure 15
e. During Easter weekend, the demand for eggs rises. Supply is not affected. As a result,