Supply and Demand and Mickey Mantle Baseball

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  • Topic: Supply and demand, Economic surplus, Inverse demand function
  • Pages : 4 (1004 words )
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  • Published : January 24, 2013
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Assignment III
Chapter 3
2. Draw graphs to illustrate the difference between a decrease in the quantity demanded and a decrease in demand for Mickey Mantle baseball cards. Give a possible reason for change in each graph. Decrease in the quantity demand of Mickey Mantle Baseball cards.

The reason is that the price increase.
Decrease in demand for Mickey Mantle Baseball cards.

The reason may be taste and preferences.
4. Draw graphs to illustrate the difference between a decrease in quantity supplied and a decrease in supply for condominiums. Give a possible reason for change in each graph.

Decrease in quantity supplied fir condominiums.

If the price decreases, the suppliers will supply less.

If the tax and subsides increase, the curve will shift and the suppliers will supply less.

6. Predict the direction of change for either supply or demand in the followings situation. a) Several new companies enter the home computer industry.
Supply goes up.
b) Consumers suddenly decide SUVs are unfashionable.
Demand goes down.
c) The U.S.Surgeon General issues a report stating that tomatoes prevent colds. Demand goes up.
d) Frost threatens to damage the coffee crop, and consumers expect the price to rise sharply in the future. Demand goes up before the price rises.
e) The price of tea falls. What is the effect on the coffee market? Demand goes up.
f) The price of sugar rises. What is the effect on the coffee market? Demand goes down.
g) Tobacco lobbyists convince Congress to remove the tax paid by sellers on each carton of cigarettes sold.
Supply goes up.
h) A new type of robot is invented that will pick peaches.
Supply goes up.
i) A computer game company anticipates that the future price of its games will fall much lower than the current price. Supply goes up before the price fall that the company will have a huge stock to support when the price fall because the demand will increase.

Appendix...
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