Transcript File

chapter:
3
>> Supply and Demand
Krugman/Wells
CHECK YOUR UNDERSTANDING
©2009  Worth Publishers
Check Your Understanding 3-1
Question 1
Explain whether each of the following events
represents (i) a shift of the demand curve or (ii) a
movement long the demand curve.
1a) A store owner finds that customers are willing to pay more for
umbrellas on rainy days.
1.
2.
This represents a shift of the
demand curve.
This represents a movement
along the demand curve.
1b) When XYZ Telecom, a long distance provider, offered reduced
rated on weekends, the volume of weekend calling increased
sharply.
1.
2.
This represents a shift of the
demand curve.
This represents a movement along
the demand curve.
1c) People buy more long-stem roses the week of Valentine’s Day,
even though the prices are higher than at other times during the
year.
1.
2.
This represents a shift of the
demand curve.
This represents a movement
along the demand curve.
1d) The sharp rise in the price of gasoline leads many commuters
to join carpools in order to reduce their gasoline purchases.
1.
2.
This represents a shift of the
demand curve.
This represents a movement along
the demand curve.
Check Your Understanding 3-2
Question 1
1a) More homeowners put their houses up for sale during a real
estate boom that causes prices to rise.
1.
2.
This represents a shift of the
supply curve.
This represents a movement
along the supply curve.
1b) Many strawberry farmers open temporary roadside stands
during harvest season, even though prices are usually low at that
time.
1.
2.
This represents a shift of the
supply curve.
This represents a movement
along the supply curve.
1c) Immediately after the school year begins, fast-food chains must
raise wages to attract workers.
1.
2.
This represents a shift of the
supply curve.
This represents a movement
along the supply curve.
1d) Many construction workers temporarily move to areas that have
suffered hurricane damage, lured by higher wages offered.
1.
2.
This represents a shift of the supply
curve.
This represents a movement along
the supply curve.
1e) Since new technologies have made it possible to build larger
ships (which are cheaper to run per passenger), Caribbean cruise
lines have offered more berths, at lower prices, than before.
1.
2.
This represents a shift of the
supply curve.
This represents a movement
along the supply curve.
Check Your Understanding 3-3
Question 1*
Given the demand and
supply of pounds of coffee,
answer the following
questions.
NEW
Price
Quantity
Demanded
Quantity
Supplied
$5
200
500
$4
400
400
$3
600
300
$2
800
200
$1
1000
100
CHECK YOUR UNDERSTANDING
1a*) The equilibrium price is $_____, and the
equilibrium quantity is _____ pounds.
1.
2.
3.
4.
NEW
$5; 500
$4; 400
$3; 300
$2; 800
Price
Quantity
Demanded
Quantity
Supplied
$5
200
500
$4
400
400
$3
600
300
$2
800
200
$1
1000
100
CHECK YOUR UNDERSTANDING
1b*) At a price of $5, there is a ______ of ______
pounds.
1.
2.
3.
4.
NEW
surplus; 100
surplus; 300
shortage; 400
shortage; 600
Price
Quantity
Demanded
Quantity
Supplied
$5
200
500
$4
400
400
$3
600
300
$2
800
200
$1
1000
100
CHECK YOUR UNDERSTANDING
1c*) At a price of $2, there is a ______ of ______
pounds.
1.
2.
3.
4.
NEW
surplus; 100
surplus; 300
shortage; 400
shortage; 600
Price
Quantity
Demanded
Quantity
Supplied
$5
200
500
$4
400
400
$3
600
300
$2
800
200
$1
1000
100
CHECK YOUR UNDERSTANDING
Check Your Understanding 3-3
Question 1
In the following three situations, the market is
initially in equilibrium.
1a) 1997 was a very good year for California wine-grape growers,
who produced a bumper-sized crop. This causes:
1.
2.
3.
4.
a shortage of grapes and prices rise.
a shortage of grapes and prices fall.
a surplus of grapes and prices rise.
a surplus of grapes and prices fall.
1b) After a hurricane, Florida hoteliers often find that people cancel
their upcoming vacations, leaving them with empty hotel rooms.
This causes:
1.
2.
3.
4.
a shortage of hotel rooms and prices rise.
a shortage of hotel rooms and prices fall.
a surplus of hotel rooms and prices rise.
a surplus of hotel rooms and prices fall.
3) After a heavy snowfall, many people want to buy secondhand
snow blowers at the local tool shop. This causes:
1.
2.
3.
4.
a shortage of secondhand snow blowers and prices
rise.
a shortage of secondhand snow blowers and prices
fall.
a surplus of secondhand snow blowers and prices
rise.
a surplus of secondhand snow blowers and prices
fall.
Check Your Understanding 3-4
Question 1
Directions: Read the scenarios and then answer the
questions
1ai) As the price of gasoline fell in the United States during the
1990s, more people bought large cars. What is the market in
question in this scenario?
1.
2.
gasoline
cars
1aii) As the price of gasoline fell in the United States during the
1990s, more people bought large cars. Did supply or demand shift,
and which way?
1.
2.
3.
4.
supply shifted left
supply shifted right
demand shifted left
demand shifted right
1aiii) As the price of gasoline fell in the United States during the
1990s, more people bought large cars. What is the effect on prices
and quantity?
1.
2.
3.
4.
quantity and price fell
quantity and price rose
quantity fell and price rose
quantity rose and price fell
1bi) As technological innovation has lowered the cost of recycling
used paper, fresh paper made from recycled stock is used more
frequently. What is the market in question in this scenario?
1.
2.
recycled paper
fresh paper made from recycled
paper
1bii) As technological innovation has lowered the cost of recycling
used paper, fresh paper made from recycled stock is used more
frequently. Does supply or demand shift, and which way?
1.
2.
3.
4.
supply shifts left
supply shifts right
demand shifts left
demand shifts right
1biii) As technological innovation has lowered the cost of recycling
used paper, fresh paper made from recycled stock is used more
frequently. What is the effect on price and quantity?
1.
2.
3.
4.
quantity and price fall
quantity and price rise
quantity falls and price rises
quantity rises and price falls
1ci) As a local cable company offers cheaper pay-per-view films,
local movie theaters have more unfilled seats. What is the market
in question in this scenario?
1.
2.
pay-per-view movies
movies at a local movie theater
1cii) As a local cable company offers cheaper pay-per-view films,
local movie theaters have more unfilled seats. Does supply or
demand shift, and which way?
1.
2.
3.
4.
supply shifts left
supply shifts right
demand shifts left
demand shifts right
1ciii) As a local cable company offers cheaper pay-per-view films,
local movie theaters have more unfilled seats. What is the effect
on prices and quantity?
1.
2.
3.
4.
quantity and price fall
quantity and price rise
quantity falls and price rises
quantity rises and price falls
Check Your Understanding 3-4
Question 2
Periodically, a computer chip maker like Intel introduces
a new chip that is faster than the previous one. In
response, demand for computers using the earlier chip
decreases as customers put off purchases in
anticipation of machines containing the new chip.
Simultaneously, computer makers increase their
production of computers containing the earlier chip in
order to clear out their stocks of those chips.
2a) What happens to the supply curve for computers using the earlier
chip?
1.
2.
it shifts left
it shift right
2b) What happens to the demand curve for computers using the earlier
chip?
1.
2.
it shifts left
it shifts right
2c) The equilibrium quantity for computers using the earlier chip
must fall.
1.
2.
True
False
2d) The equilibrium price for computers using the earlier chip must
fall.
1.
2.
True
False