Factors Influencing the Increase in Productivity of Market Items
A) List and explain the three reasons Adam Smith said productivity increases with specialization. Who was Adam Smith?
a. Adam Smith is writer. He wrote a book titled “An Inquiry into the Nature and Causes of the Wealth of Nations.”+
b. Three Reasons
i) Repetition
• The more times that an employee performs a task, the more capable the employee are at the task. ii) Continuity
• A specialized employee doesn’t spend time exchange from one task to another. iii) Innovation
• A specialized employee gains insights into a particular task that lead to better production methods.
B) The laws of supply and demand suggest the following: Fill in the blanks and give examples:
a. An increase in demand will generally raise price and ____ quantity demanded.
i) Raise
b. A decrease in demand will generally ____ price and ____ quantity demanded.
i) Lower ii) Lower
c. An increase in supply will generally ____ price and ____ quantity demanded.
i) Lower ii) Raise
d. A decrease in supply will generally ____ price and ____ quantity demanded.
i) Raise ii) Lower
C) For each of the following, explain whether quantity demanded changed because of a demand shift or a price change:
a. As a result of decreased military spending, the price of Army boots fell.
i) Demand shift: demand for the boots falls and the price drops.
b. Fish prices fell after the Pope allowed Catholics to eat meat on Friday.
i) Demand shift: demand for fish decrease and the price drops.
c. An increase in gasoline taxes lowered the consumption of gasoline.
i) Price change: price for gas tax increase and the consumption for gas lower.
d. Local Wages increased after Hurricane Katrina struck the New Orleans area.
i) Price Change: price for the wage increase and the employment rate decrease.
D) Critical Thinking: According to an article in MSNBC.com, golf courses got hit hard by the recession. More golf courses are closing than opening and many are tied to housing projects that are on hold until the
a. Adam Smith is writer. He wrote a book titled “An Inquiry into the Nature and Causes of the Wealth of Nations.”+
b. Three Reasons
i) Repetition
• The more times that an employee performs a task, the more capable the employee are at the task. ii) Continuity
• A specialized employee doesn’t spend time exchange from one task to another. iii) Innovation
• A specialized employee gains insights into a particular task that lead to better production methods.
B) The laws of supply and demand suggest the following: Fill in the blanks and give examples:
a. An increase in demand will generally raise price and ____ quantity demanded.
i) Raise
b. A decrease in demand will generally ____ price and ____ quantity demanded.
i) Lower ii) Lower
c. An increase in supply will generally ____ price and ____ quantity demanded.
i) Lower ii) Raise
d. A decrease in supply will generally ____ price and ____ quantity demanded.
i) Raise ii) Lower
C) For each of the following, explain whether quantity demanded changed because of a demand shift or a price change:
a. As a result of decreased military spending, the price of Army boots fell.
i) Demand shift: demand for the boots falls and the price drops.
b. Fish prices fell after the Pope allowed Catholics to eat meat on Friday.
i) Demand shift: demand for fish decrease and the price drops.
c. An increase in gasoline taxes lowered the consumption of gasoline.
i) Price change: price for gas tax increase and the consumption for gas lower.
d. Local Wages increased after Hurricane Katrina struck the New Orleans area.
i) Price Change: price for the wage increase and the employment rate decrease.
D) Critical Thinking: According to an article in MSNBC.com, golf courses got hit hard by the recession. More golf courses are closing than opening and many are tied to housing projects that are on hold until the