1. The market for toasters is a competitive market. Suppose that the quantity of toasters supplied per year depends as follows on the price of a toaster:
|
Price
(dollars per toaster)
|
Quantity supplied
(millions of toasters)
|
|
32
|
4.0
|
|
34
|
5.0
|
|
36
|
5.5
|
|
38
|
6.0
|
|
40
|
6.5
|
a. On a piece of graph paper, plot the supply curve for toasters.
b. How does the quantity supplied of toasters change when the price changes?
2. The market for toasters is a competitive market. Suppose that the quantity of toasters demanded per year depends as follows on the price of a toaster:
|
Price
(dollars per toaster)
|
Quantity demanded
(millions of toasters)
|
|
32
|
7.0
|
|
34
|
6.5
|
|
36
|
6.2
|
|
38
|
6.0
|
|
40
|
5.8
|
a. On the same piece of paper you plotted the supply curve in problem 1, plot the demand curve for toasters.
b. What is the equilibrium price and quantity of toasters?
3. HD television sets are a normal good and movies are a substitute for HD television sets. Tell whether the following shift the demand curve for HD television sets rightward, leftward, or not at all.
a. Consumers' incomes rise by 10 percent.
b. The price of a movie ticket rises by 15 percent.
c. The cost of the computer chips used to produce HD television sets falls by 40 percent.
d. Medical reports indicate that watching television helps prevent heart attacks.
4. Tell whether the following directly shift the supply curve for HD television sets rightward, leftward, or not at all.
a. The price of the metal used to produce HD television sets rises by 40 percent.
b. Medical reports indicate that watching television helps prevent heart attacks.
c. New technology is developed that allows television manufacturers to use fewer parts when making an HD television set.
d. The number of companies making HD television sets decreases.
5. Suppose that consumers come to believe that eating organically grown food is healthy. Use a demand and supply diagram to illustrate the effect of this belief on the equilibrium price and quantity of organically grown food.
6. Suppose that an increase in the price of natural gas raises the cost of making pizza. Use a demand and supply diagram to illustrate the effect on the equilibrium price and quantity of pizza.