Ecn222Fall2010Chapter4questions,dueThursday,September16th
1. Whatisthedifferencebetweenachangein“demand”andachangein“quantitydemanded”?
Achangeindemandisashiftoftheentirecurvecausedbyachangeinanonprice
determinant
Achangeinquantitydemandedisamovementalongthecurvecausedbyachangeinprice.
2. Useonediagramtoillustrateachangein“demand”andonetoillustrateachangein“quantity
demanded”
P
Changein P
Demand ChangeinQD
P0
P0
D
D D
Q0 Q Q
Q0
3. Ifthepriceofbagelsincreases
a. Thedemandforbagelswilldecrease
b. Thedemandforbagelswillincrease
c. Thedemandformuffinswillincrease
d. Thedemandformuffinswilldecrease
4. AnalyzethemarketforsurfinglessonsatWrightsvillebeach.Foreachofthefollowing,which
curveshifts(orboth)andwhichdirection(s)?
Event Curve Direction
AHurricanecausesriptidesandmakessurfingmoredangerous
Demand Left
AnoilspillintheGulfcausesmoretouriststovisitWB
Demand Right
Asharkattackbringsattentiontothedangersoftheocean
Demand Left
Withabadeconomymorestudentsopensurfschoolsafter
graduationsincetheycannotfindotherjobs Supply Right
Wrightsvillebeachbeginsrequiringexpensivelicensesto
conductbusinessonthebeach Supply Left
Theeconomybeginstorecoverandpersonalincomerises
Demand Right
Hurricaneactivitypicksupandit’spossiblethebeachwillbe
closedinthefuture Both Right
Dr.JoneswhoREALLYneedssomesunstrollsontothebeach
andscaresallthetouristsaway Demand Left
5. #14inMankiw,Chapter4
SupposethepriceofbasketballticketsatUNCWisdeterminedbymarketforces.Currentlythe
demandandsupplyschedulesareasfollows:
6.
P
P0
P1
D D
Q1 Q0 Q
7.
P
SurplusofLabor
(cashiers) S
$8.00
7.25
D
P1
P0
D D
Q1 Q0 Q
8.b.
P
P1
P0
D1
Q0 Q1 Q
8.c.
P
S1
S0
P1
P0
D1
D0
Q0 Q1 Q
S1
P
S0
P1
P0
D1
D0
Q1 Q0 Q
MiscellaneousComments
Note,inproblem3,achangeinthepriceofbagelswillleadtoachangeinquantitydemandedofbagels,
notachangeindemand.(seedefinitionsinquestions1and2)BagelsandMuffinsaresubstitutessoan
increaseinthepriceofbagelswillcauseanincreaseinthedemandformuffins.
#4.Apossibleclosingofthebeachinthefuturewouldmeanifyouwanttotakeasurfinglesson,takeit
now,demandshiftsout.Also,sellersknowthattheymightnotbeabletoworkinthefuture,worknow,
makehaywhilethesunshines.
#7Notethatthenumberofcashiersemployedfellfromtheinitialnumber,QE,tothenewlower
quantitytargetdemands,QD.Theactualquantityhired(orpurchased)isequaltothelesserofthetwo,
quantitysupplied,orquantitydemanded.Youcan’tsellmorethanbuyersarewillingtopurchaseand
youcan’tbuymorethansellersarewillingtosupply.Atequilibrium,quantitydemandedequals
quantitysuppliedbutwhenthereissomethinglikeaminimumwagekeepingapricefromadjustingto
equilibriumweseethequantityequalsthelesserofthequantitysuppliedordemanded.