. Figure 8: An Increase in Demand in the Short Run and Long Run. P. 294
(1) This figure illustrates the important dynamics of competitive markets.
6. Why the Long Run SupplyCurve Might Slope Upward
a. Limited resources and
b. firms may have different costs.
c. This is called an increasingcost...
Costcurves can be combined to provide information about firms. In this diagram for example, firms are assumed to be in a perfectly competitivemarket. In a perfectly competitive market the price that firms are faced with would be the price at which the marginal costcurve cuts the average...
explain the effects with supply and demand analysis. If the cable TV company is worried about disgruntling customers, suppose that the company may introduce a different type of programming that is cheaper for the company to provide yet is equally appealing to customers. Explain what would be the...
because they know that if they dent buy more now, they will
have to pay much higher prices in future.
The existence of such goods and factors explain why under exceptional case the demand
curve may be positivelysloped as below.
Demand Curve for...
2 Labour supply is positivelysloped also because it is assumed that we have the absence of an income effect, namely the tendency of highincome workers to reduce labour supply when their wage increases.
Chapter 3: Unemployment and the AD–AS model
point along the curvewould achieve the same utility along the curve. Having a household next to the CBD minimizes commute costs but the rent is very expensive because it holds the same utility for all households. Households further away from the CBD have longer commute times but they would be offset by...
. What is the opportunity cost of working 10 hours a week flipping burgers while in college? If you worked more hours per week, would you experience increasing or constant opportunity cost? That is, would the extra hours require giving up alternative uses of your time that have the same value or an...
passes through the point P= Rs.25 and Qs=500. Give two interpretations of this point on the supplycurve.
7 In 2003, the Men`s Hair company increased the price of its shampoo and subsequently sold more shampoo than 2002. Is the demand curve for this company positivelysloped? When the demand...
demanded at each price therefore increases the price of coffee
- another examplewould be if less coffee is being bought because of its rise in price
- movement along the new demand curve reflects a change between two specific quantities demanded
A rise in the population and income in...
each firm produces one variety of differentiated product
negatively sloped and highly elastic demand curve
all firms have access to the same technology ad thus have the same costcurves
the industry contains so many firms that each one ignores competitors when making price and output decisions...
Are the following statements true or false? Explain your answers in detail.
1. "Generally speaking the aggregate supply schedule is said to be positivelysloped because of the same reasons a firms supplycurve is positivelysloped".
2. "A short run aggregate supplycurve can be derived by...
expensive than basket 1. Otherwise, he wouldhave chosen basket 1 at the new prices. Equation (4.8) states that basket 2costs no more than basket 1 at the new prices. Px x2 Py y2 Px x1 Py y1 (4.8)
Why must equation (4.8) be satisfied if the consumer’s choices are consistent with utility...
demand curve Specialization & division of labor Increasing marginal cost Public goods
12. "The compact disk player has literally revolutionized the recording industry with its state-of-the-art sound, clarity, durability, and the fact that it costs less than cassette tape players." Assuming that...
achieved. To do
so, we simply add лT to the numerator of Equation 7 and have:
QT = TFC + лT
For example, if the firm represented in the cost-volume-profit chart in Figure 2 wanted to earn a
target profit of $100, the target output would be:
Q = $200+$100 = $300 = 60
from competing sources including labor to run the machinery, caring for the cows, and management of farm operations. Twoexamples of increasing-costindustries in my state of Maryland are electricity and natural gas. The supplycurve is positivelysloped because it is consistent with the law of...
import restriction, the curve turns vertical at a value of 50 sundials. Queoldiola CANNOT export more than 50 sundials to Csonda. The new export supplycurve thus has two parts -- positivelysloped up to 50 sundials (a price of 9 csonds), then vertical for higher prices. A click of the [Quota] button...
The quantities of two goods.
Incorrect. The income-consumption curve traces the utility-maximizing combinations of two goods as a consumer's income changes.
Incorrect If food is an inferior good, then
its demand curve will be positivelysloped.
of the “commercial business” world. There have been few historical examples that carefully balance the line between compassionate and commercial, and the microfinance industry often states that this balance is our goal. If we are successful, it is what sets us apart from much lending of the past...
have three explanations of why the AD curve is downward sloping from left to right. They are: (1) the wealth effect; (2) the interest-rate effect; (3) the foreign purchases effect
Aggregate Supply is the supply of all products in an economy - OR the relationship between the Price Level and the level...