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• Demand Schedule
– The demand schedule is a table that
shows the relationship between the price of
the good and the quantity demanded.
Price
Quantity
10
1
9
2
8
3
7
4
6
5
© 2007 Thomson South-Western
Figure 1 Catherine’s Demand Schedule and Demand Curve
Price of
Ice-Cream Cone
$3.00
2.50
1. A decrease
in price ...
2.00
1.50
The demand curve
is a graph of the
relationship
between the
price of a good
and the quantity
demanded.
1.00
0.50
0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of
Ice-Cream Cones
2. ... increases quantity
of cones demanded.
© 2007 Thomson South-Western
Demand
• Demand (D)
– the various amounts consumers
are willing and able to purchase at
a series of possible prices at a
given point in time
• Quantity Demanded (QD)
– the amount consumers are willing
and able to purchase at a specific
price at a given point in time.
© 2007 Thomson South-Western
Distinguishing Demand and Quantity Demanded
Demand
P
$5
4
3
2
1
QD
10
20
35
55
80
Quantity Demanded
Entire
relationship
P
$5
4
3
2
1
QD
10
20
35
55
80
Only a
part of
the
relationship.
© 2007 Thomson South-Western
Changes in Quantity Demanded
Price of IceCream
Cones
B
$2.00
A tax on sellers of icecream cones raises the
price of ice-cream
cones and results in a
movement along the
demand curve.
A
1.00
D
0
4
8
Quantity of Ice-Cream Cones
© 2007 Thomson South-Western
Shifts in the curve are caused by any change that alters the quantity
demanded at every price.
This product more people want to buy
but not because the price went down.
Look at the price and Quantities
Notice the price
stayed the same
D
Price
5
d2
d1
6
10
Quantity
© 2007 Thomson South-Western
Price Change
Price
Change in Demand
QD
D1
D
P
r
i
c
e
d2
d1
Quantity
Price
Quantity
QD
D1
Quantity
P
r
i
c
e
D
d1
d2
© 2007 Thomson South-Western
A decrease in taste
for videos results in a
decrease in demand.
D1 D2
An increase in taste
for DVDs results in an
increase in demand.
D3
P
QD3 QD1 QD2
© 2007 Thomson South-Western
Shifts in the Demand Curve
• Consumer Income
• As income increases the demand for a normal good
will increase.
• As income increases the demand for an inferior
good will decrease.
© 2007 Thomson South-Western
The Impact of a Change in Income
• Higher income decreases the • Higher income increases the
demand for a normal good
demand for an inferior good
© 2007 Thomson South-Western
can increase/decrease from
economic decisions, advertising, and
government political decisions (China).
Ex: The large “baby boom” of 1946-64
increased the demand for baby supplies.
An increase in life expectancy increased
demand for for medical care, retirement
communities, and nursing homes.
Increase in # of consumers
© 2007 Thomson South-Western
If the iPod-Touch is expected to
increase in price from $295 to $450.
D1 D2
iPod-Touch
P
QD1 QD2
© 2007 Thomson South-Western
Shifts in the Demand Curve
• Prices of Related Goods
• When a fall in the price of one good reduces the
demand for another good, the two goods are called
substitutes.
• When a fall in the price of one good increases the
demand for another good, the two goods are called
complements.
© 2007 Thomson South-Western
D1 D 2
P
Complement
[Inverse]
Gangsta Grills
D
D1
P1
D2
P
P2
QD1 QD2
Chrysler 300s
Substitute
[Direct]
Toyotas
MV X PQ
© 2007 Thomson South-Western
[Decrease in price of one; increase in the “D” for the other]
P1
P2
QD1 QD2
D1 D2
Boat Prices
P
QD
QD
Gasoline Demand
No change
in price
I’m making more
money without
dropping my prices.
They are so cheap that
even dogs are buying boats
© 2007 Thomson South-Western
Substitutes – Direct
[Increase in price of one; increase in “D” of the other]
D
P
P2
D1
D2
QD
QD
P1
QD2
QD1
Demand for
Microsoft’s Zune
Price of
iPod Video
1977, Bill was
arrested for
running a stop
sign and driving
without a license.
© 2007 Thomson South-Western
D
P1
P2
Diminishing Marginal Utility
•
•
QD1 QD1
Each additional unit of an item purchased gives less
marginal utility (happy points) than the previous unit.
Therefore, the only way I will buy more is if the price is
lower.
Ex. When I’m hungry, I typically will buy 2 breakfast
tacos. The reason I don’t buy a third taco is because the
marginal utility of the third taco is less than the price of the
taco. But, if the price of the taco is less than the marginal
utility of the taco, then I will buy the third taco
© 2007 Thomson South-Western
Disutility [or negative utility]?
I ate one hamburger, and it tasted
great. The next two tasted okay. I
wish I hadn’t have eaten the 5th. I
can’t finish the 6th.
.
DIMINISHING MARGINAL UTILITY
Utility (satisfaction) decreases as more of the same product
is consumed.
© 2007 Thomson South-Western
11. Elasticity of D – the way price affects QD.
12. Elastic - QD that is very responsive to price.
13. Inelastic - a chg in price has little impact on QD.
Elastic (flexible) Demand
1. Substitutes (butter)
2. Luxury (mink coat)
3. Expensive (car)
4. Has durability (refrigerator)
5. Lasts a long time (gas-guzzling car)
Inelastic (inflexible) Demand
1. No substitutes (milk)
2. Necessity (insulin)
3. Inexpensive (safety pin)
4. No durability (pencil)
5. Lasts only a short time (bread)
© 2007 Thomson South-Western
Elastic Demand For Cassette Tapes
“TR” Test
$2.50x100,000=$250,000
$1.50x600,000=$900,000
+$650,000
D
-$1
.
Think of “responsiveness” as “flatness”.
© 2007 Thomson South-Western
D
“TR” Test
$2 = $30 bil.
$1 = $20 bil.
-$10 bil.
-$1
+25% QD
© 2007 Thomson South-Western
Increase in “QD”
Decrease in “QD”
[caused by a “decrease in price”]
[caused by an “increase in price”]
D
D
1. Price change
2. Movement
3. Point to point
P1
P2
[“Snap
shot of 1 pt in time]
P2
P1
QD2 QD1
QD1 QD2
D1 D2
P
Change in “D” [“TIMER”]
1. Non-price
2. Whole curve
3. Shift
D1
P
D2
[“Time passes”]
“Increase in D”
What could cause an “increase in Demand?”
1. Increase in taste
2 .Increase in income [normal good]
3. Decrease in income [inferior good]
4. Increase in market size [# of consumers]
“Decrease in D”
5. Expectations of a shortage
6. Expectations of a price increase
7. Expectations of positive future income
8. Incr in price of a substitute for product “X”
9. Decr in price of a complement
of product “X”
© 2007 Thomson South-Western
+/- D/QD
Graph The Black Boldfaced Items
D 1. A population increase affects sales of Blackberry phones.
+ ___
___
- ___
___
D 2. Consumer incomes in the city of Plano decrease,
with the result that jewelry sales are affected.
+ QD
___
___ 3. A camera store has a sale that features 25% off the price of all cameras.
- QD
___
___ 4. Texas imposes a 15% luxury tax on the sale of sailboats.
___
+ ___
D 5. A frost in Florida destroys 60% of the orange crop and increases
expectations about a future price increase of oranges.
- ___
___
D 6. Consumers expect the price of iPads to decrease next month.
- ___
___
D 7. The sale of DVDs is affected by a 20% increase in the price of DVD players.
D
P2
DVD
Players
D1
[Complements -
P1
INVERSE]
DVDs
+
D 8. The sale of buns is affected by a 20% decrease in the price of complement ___ ___
QD2 QD1
hamburger meat.
Hamburger
meat
D1
D
[Complements -
P1
INVERSE]
P2
Buns
+ ___
D 9. The sale of Kangaroo meat in Europe [Roo Steak] is affected
___
by a 25% increase in the price of beef, which is a substitute for roo steak.
QD1 QD2
P2
P1
D
D1
Beef
[Substitutes -
DIRECT]
Kangaroo meat
+
___QD
___ 10. Dunkin Donuts lowers the price of donuts & experiences a change in sales.
QD2
QD1
© 2007 Thomson South-Western
[D – “TIMER; QD – price change [inverse]
A Which will cause an “Increase in Demand” for the Blackberry Curve?
__1.
a. increase in income c. increase in the price of the Blackberry Curve
b. decrease in income d. decrease in the price of the Blackberry Curve
C Which will cause an “Increase in QD” for the Blackberry Curve?
___2.
a. decrease in income c. decrease in the price of the Blackberry Curve
b. increase in income d. increase in the price of the Blackberry Curve
___3.
Which will cause a “Decrease in Demand” for projectors?
C
a. increase in the price of projectors
c. decrease in # of consumers
b. decrease in the price of projectors
d. increase in projector taste
A
___4.
Which will cause a “Decrease in QD” for projectors?
a. increase in the price of projectors
b. decrease in the price of projectors
c. decrease in # of consumers
d. increase in projector taste
© 2007 Thomson South-Western
NS 27-38
1. An increase in the price of Pepsi causes the
demand curve for Coke to move to the (right/left).
2. If there is a sale on shirts, the demand curve for ties will move
to the (right/left).
3. If a man’s workplace is about to close down, his demand
curve for major purchases would move to the (right/left).
4. If a cure for lung cancer were found, the demand curve for
cigarettes would move to the (right/left).
5. If the price of pancakes decreases, the demand
for syrup, a complement, will (increase/decrease).
6. If the price of butter decreases, the demand for margarine will (incr/decr).
7. A “change in QD” is caused by (price change/TIMER) [a “movement”]
8. A “change in D” is caused by (price change/TIMER) [a “shift”]
e
© 2007 Thomson South-Western
Definitions
• Supply (S)
– the various amounts sellers are willing
and able to produce/sell at a series of
possible prices at a given point in time
• Quantity Supplied (QS)
– the amount sellers are willing and able to
produce/sell at a specific price at a given
point in time.
© 2007 Thomson South-Western
Generally Speaking…
 Price
__ Quantity Supplied
 Price
__ Quantity Supplied
direct relationship?
________
© 2007 Thomson South-Western
Ben’s Supply Schedule- supply schedule is a table
that shows the relationship between the price of the
good and the quantity supplied.
© 2007 Thomson South-Western
Figure 5 Ben’s Supply Schedule and Supply Curve
Price of
Ice-Cream
Cone
$3.00
1. An
increase
in price ...
2.50
2.00
1.50
1.00
0.50
0
1 2
3
4
5
6
7
8
9 10 11 12 Quantity of
Ice-Cream Cones
2. ... increases quantity of cones supplied.
© 2007 Thomson South-Western
Change in Quantity Supplied
Price of IceCream
Cone
S
C
$3.00
A rise in the price
of ice cream
cones results in a
movement along
the supply curve.
A
1.00
0
1
5
Quantity of
Ice-Cream
Cones
© 2007 Thomson South-Western
Decrease in “QS”
Increase in “QS”
[caused by a “decrease in price”]
S
P1
P2
[caused by an “increase in price”]
1. Price change
2. Movement
3. Point to point
[“Snap
S
P2
P1
shot of 1 pt in time]
QS1 QS2
QS2 QS1
Change in “S” [RATNEST]
S1
S2
P
“Increase in S”
1. Non-price
2. Whole curve
3. Shift
[“Time passes”]
What could cause an “increase in supply?”
1. Decrease in resource cost [wages/raw materials]
2. Decrease in the price of an alternative output for “X”
3. Increase in technology
P
S2 S1
“Decrease in S”
4. Increase in number of producers
5. Producer expectations of $ decrease
6. Increase in subsidies
7. Decrease in taxes
© 2007 Thomson South-Western
S2
S1
S3
P
Resource Cost [wages & raw materials] [inverse]
58. Increase in wages (increases/decreases) supply.
Ex: A decrease in the price of computer chips
(increases/decreases) the supply of computers.
© 2007 Thomson South-Western
These are “things that can be supplied with the same resources”.
I only have
200 acres
P2
Broccoli
Corn
S
S2
S1
P
P1
QS1 QS2
Producers want to produce more of the good where price is increasing,
P1
Corn
Broccoli S
S1
S2
P
P2
QS2 QS1
or at least, where the price is not going down.
“Substitutes in production” [Remember, productive resources are scarce]
© 2007 Thomson South-Western
“Can’t wait till
milking time.”
This lowers production costs & increases “S”.
Ex: Suppose a new milking machine called
“The Invisible Hand” has a very soothing
effect on cows; cows find the new machine
so “udderly” delightful that they produce
30% more milk. This technological advance
will cause a shift to the right. 54
© 2007 Thomson South-Western
S3
S1
S2
P
56. If more firms enter an industry, the supply
curve will shift to the (left/right).
• When the American Basketball League
began play in 1968, there was a (bigger/smaller)
supply of basketball games each week.
60. A new professional football league will
(increase/decrease) the supply of football games.
© 2007 Thomson South-Western
[“INVERSE”]
S2
Oil Prices
expected P
to decrease
S1
S2
Oil Prices
expected
to increase
59. If oil producers expect future oil prices to decline,
they will (increase/decrease) current production.
If oil producers expect future oil prices to increase,
they will (increase/decrease) current production.
For example, if the cattle farmer expects higher prices for beef in the
future, he will send (more/less) cattle to market now.
He will keep them on the farm now and would send the cattle to the
market in the future when prices are expected to be higher.
© 2007 Thomson South-Western
S3
[Direct]
S1
S2
P
Free money from the government (subsidies)
induces suppliers to supply more.
If subsidies are taken away, then suppliers are
losing money and will decrease supply.
© 2007 Thomson South-Western
S3
I’m losing
profits.”
[Inverse]
S1
S2
P
If business have their taxes decreased,
it moves the supply curve to the right.
55. If business have their taxes increased,
it moves the supply curve to the (left/right).
© 2007 Thomson South-Western
45. Elastic Supply – a small increase/decrease in price
causes significant change in QS. Elastic supply is very responsive
to price changes.
Elastic (Flexible) Supply
1. Can be made quickly
2. Little expense (few
capital resources required)
3. (47) Unskilled workers
4. Long time
5. Don’t need scarce
natural resources
Examples: (50) T-shirts, hats,
shot glasses, and posters
Inelastic (Inflexible) Supply
1. Cannot be made quickly
2. Great Expense (large capital
resources required)
3. (48) Skilled workers
4. Short time
5. Scarcity of natural resources
Examples: Gold, diamonds,
and (49) computers
© 2007 Thomson South-Western
46. Inelastic Supply - regardless of price, producers are
unwilling/unable to increase/decrease QS. (QS is inflexible
and unresponsive to price changes)
51. Elastic supply
results in a more
horizontal line &
52. inelastic
supply results in
a more vertical
line.
Elastic supply is very
responsive to price &
inelastic supply is
unresponsive to price.
0 1000 2000 3000 4000 5000
© 2007 Thomson South-Western
• 6. Show what happens to the Demand for Apples if they
are found to fight cancer.
• 7. Show what happens to the Demand for Gasoline if a
Hurricane is heading toward us.
• 8. Show what happens to the Production of a Chemical
Plant if the Govt cuts restriction on pollution.
• 9. Show what happens to the Demand for Coach Days
tutoring as the Test Approaches.
• 10. Show what happens to the Supply of Labor in a Job
that has Great Benefits
© 2007 Thomson South-Western
• 11.Show what happens to the Demand for Labor
If the Govt raises the Minimum Wage.
• 12. Show what happens to the supply of Labor if
the Govt raises the Minimum Wage.
• 13. Show what happens to the Demand for Cars
if the govt lowers the Legal driving Age.
• 14. Show what happens to the Demand for Beer
if the govt raises the legal drinking age.
• 15. Show what happens to the demand of
diapers if there is an influx of new immigrants.
© 2007 Thomson South-Western
• 16. Show what happens to the demand for
Flashlights if a hurricane is expected.
• 17. Graph the demand for Coke and Pepsi if
coke goes on Sale.
• 18. Graph the supply of Coke and Pepsi if they
both raise their prices.
• 19. Graph the Demand for Coke and Pepsi if
they both lower their prices.
• 20 What is the Law of demand.
© 2007 Thomson South-Western
SUPPLY AND DEMAND TOGETHER
• Equilibrium Price
– The price that balances quantity supplied and
quantity demanded.
– On a graph, it is the price at which the supply and
demand curves intersect.
• Equilibrium Quantity
– The quantity supplied and the quantity demanded
at the equilibrium price.
– On a graph it is the quantity at which the supply
and demand curves intersect.
© 2007 Thomson South-Western
SUPPLY AND DEMAND TOGETHER
Demand Schedule
Supply Schedule
At $2.00, the quantity demanded
is equal to the quantity supplied!
© 2007 Thomson South-Western
Raising price above Pe
• What is
created if
price is
increased
above PE?
P
S
P
PE
 P → ____ QD ____ QS

QS
QD ?
D
Creates a:
surplus
___________________
How do you eliminate a surplus?
QD
_____ P
QE
QS
Q
_____ QD ____ QS until _____.
© 2007 Thomson South-Western
Equilibrium
• Surplus
• When price > equilibrium price, then quantity
supplied > quantity demanded.
• There is excess supply or a surplus.
• Suppliers will lower the price to increase sales, thereby
moving toward equilibrium.
© 2007 Thomson South-Western
Figure 9 Markets Not in Equilibrium
(a) Excess Supply
Price of
Ice-Cream
Cone
Supply
Surplus
$2.50
2.00
Demand
0
4
Quantity
demanded
7
10
Quantity
supplied
Quantity of
Ice-Cream
Cones
© 2007 Thomson South-Western
Equilibrium
• Shortage
• When price < equilibrium price, then quantity
demanded > the quantity supplied.
• There is excess demand or a shortage.
• Suppliers will raise the price due to too many buyers
chasing too few goods, thereby moving toward
equilibrium.
© 2007 Thomson South-Western
Lowering price below Pe
• What is
created if
price is
dropped
below PE?
 P → ____ QD ____ QS

QS
P
S
PE
QD ?
Creates a:
___________________
shortage
P
D
This is called the “rationing function
of prices – the price allocates the good.
How do you eliminate a shortage?
QS
_____ P
QE
QD
Q
_____ QD ____ QS until _____.
© 2007 Thomson South-Western
• Price floor- price minimum that buyers are
required to pay
• Price ceiling- maximum price that sellers
are allowed to charge for a service
Which category would a rent-controlled
apartment fall into?
© 2007 Thomson South-Western
Government Intervention
P
• Producers
complain
market price is
too low.
Price Floor
• ____________
_establishes a
PE
legal minimum
price below
which the price
cannot fall
• Creates:
• ____________
Surplus
_
Examples: Farm price supports; minimum wage
S
D
QE
Q
© 2007 Thomson South-Western
Wage
Labor
Demand
Surplus of Labor
= Unemployment
Labor
Supply
Minimum
wage
WE
0
LD
LE
LS
Quantity of Labor
© 2007 Thomson South-Western
Negative impacts of price floors
• Reduces the quantity available
• Inefficient allocation of sales among
sellers- those willing to sell the good at the
lowest price are not able to sell it
• Inefficiently high quality- suppliers spend
more on the goods to make them higher
quality but consumers aren’t willing to pay
for the higher quality of the good
© 2007 Thomson South-Western
Government Intervention
• Consumers
complain market
price is too high.
Price Ceiling
• ______________
establishes a
legal maximum
price above which
the price cannot
rise
• Creates:
• ______________
Shortage
P
S
PE
D
QE
Q
Example: rent controls in big cities.
© 2007 Thomson South-Western
Figure 9 Markets Not in Equilibrium
(b) Excess Demand
Price of
Ice-Cream
Cone
Supply
$2.00
1.50
Shortage
Demand
0
4
Quantity
supplied
7
10
Quantity of
Quantity
Ice-Cream
demanded
Cones
© 2007 Thomson South-Western
Negative impacts of price ceiling
• Wasted resources
• Inefficient allocation to consumers- people
who want the good and are willing to pay
the higher price don’t get it and those
willing to pay a lower price do get it
• Inefficiently low quality- sellers offer lower
quality goods at a low price even though
buyers would prefer higher quality at a
higher price
© 2007 Thomson South-Western
Quality controls
• Limit on a good or quantity that can be
bought or sold (quota)
• License- gives owner a right to supply
good/service
© 2007 Thomson South-Western
COKE RAISES ITS PRICE
SURPLUS
OF COKE
P
S1
1.50
How many
Buyers? 50
EP1 1.00
IF COKE RAISES ITS
PRICE THEY WILL MAKE
MORE COKE BUT LESS
PEOPLE WILL BE BUYING
IT BECAUSE THE PRICE
WENT UP
How many
made? 150
D1
50
EQ1
150
Q
© 2007 Thomson South-Western
COKE LOWERS ITS PRICE
S1
How many
will be
made? 50
P
Therefore you
have a shortage
of coke!
EP1 1.00
How many
want to buy it?150
.50
D1
50
100
EQ
150
© 2007 Thomson South-Western
Gasoline- Hurricane Wipes out some of the Gasoline Refineries
p
s
Ep
1.00
d
eq
100
q
© 2007 Thomson South-Western
GasolineHurricane Wipes out some of the Gasoline Refineries
s2
p
s
ep2
Ep
s
1.00
d
eq2
eq
100
q
© 2007 Thomson South-Western
Gas-China has a billion People and they are all starting to get cars
p
s
Ep
1.00
d
eq
100
q
© 2007 Thomson South-Western
Gas-China has a billion People and they are all starting to get cars
p
s
Ep
D
1.00
d2
d1
eq
100
q
© 2007 Thomson South-Western
Astros T shirts if they are in the world series
p
s
Ep
D
20
d2
d1
eq
100
q
© 2007 Thomson South-Western
Gasoline!!!! When a hurricane starts coming towards you!!!!
p
s
10
Ep
D
2.80
d2
d1
eq
100
q
500
© 2007 Thomson South-Western
P
S
Pe
D
Qe
If the increase in demand is greater than
the increase in supply, the price increasing
effect of the increase in demand will
override the price decreasing effect of the
increase in supply.
Q
Pe Qe
© 2007 Thomson South-Western
P
S
Pe
D
Qe
If the increase in supply is greater than
the increase in demand, the price
decreasing effect of the increase in
supply will override the price increasing
effect of the increase in demand.
Q
Pe Qe
© 2007 Thomson South-Western
P
S
Pe
D
Qe
If the increase in supply and the increase in
demand are of equal amounts, the price
increasing effect of the increase in demand
will be offset by the price decreasing effect of
the increase in supply -- thus no change will
occur in the price.
Q
Pe Qe
© 2007 Thomson South-Western
Table 4: What Happens to Price and Quantity When Supply
or Demand Shifts?
© 2007 Thomson South-Western
“Increase in
D1
D”
S
D2
P2
P1
“Decrease in
D1
S
P1 D2
P2
QD1 QD2
(A)
TIMER
QD2 QD1
(B)
D”
“Increase in S”
D
S1
S2
P1
P2
“Decrease in S”
S2
D
S1
P2
P1
QD1 QD2
QD2 QD1
(C)
RATNEST (D)
A
___1.
Decrease in income on market for used cars.
B
___2.
Decrease in income on market for new cars.
B
___3.
Consumer expectations about a price decrease.
C
___4.
Producer expectations about a price decrease.
C
___5.
Increase in # of producers on the market for computers.
A
___6.
Increase in # of consumers on the market for used cars.
A
___7.
Increase in # of consumers on the market for new cars.
A
___8.
Decrease in the price of iPods upon the market for iTune songs.
C
___9.
Decrease in business taxes on the market for computers.
A
___10.
Consumer expectations of a shortage of apples.
C
___11.
Decrease in resource cost on market for computers.
D
___12.
Increase in price of wheat upon market for corn.
A
___13.
Consumer expectations of a shortage of cell phones.
D
___14.
Producers expectations about a price increase.
A
___15.
Increase in income on the market for iPod videos.
© 2007 Thomson South-Western
A
___1.
A
___2.
D
___3.
___4.
A
___5.
C
___6.
D
Increase in income on the market for camcorders.
Increase in # of consumers on market for computers.
Producer expectations about a price increase.
Consumer expectations about a price increase.
Increase in # of producers on market for digital cameras.
Increase in resource cost on the market for
bagels.
___7.
A Increase in the price of Apple’s iPhone on
the market for Google’s Nexus One phone.
B Increase in the price of tea on the market for lemon.
___8.
___9.
D Increase in business taxes on the market for SUVs.
A
___10.
Consumers expect a shortage of cell phones.
© 2007 Thomson South-Western
Effect of Changes in “D” or “S” on Price and Quantity
6. A decrease in taste for Fuzzy Wuzzies would:
a. increase D, increase P, & increase Q.
c. increase S, increase P, & increase Q.
b. decrease D, increase P, & decrease Q.
d. decrease D, decrease P, & decrease Q.
7. A reduction in the number of firms producing laptops:
a. increase S, increase P, & increase Q.
c. decrease S, increase P, & decrease Q.
b. increase D, increase P, & increase Q.
d. decrease S, decrease P, decrease Q.
8. An increase in the price of pancakes, a complement for syrup would:
a. increase D, increase P, & decrease Q.
c. decrease D, decrease P, & decrease Q.
b. decrease D, decrease P, & increase Q.
d. do none of the above
9. A decrease in income upon the market for spam would:
a. decrease S, increase P, & decrease Q.
c. increase D, decrease P, & increase Q.
b. decrease S, increase P, & increase Q.
d. increase D, increase P, & increase Q.
10. Consumer expectations that the price of iPad will increase by
50% in the future will:
a. decrease S, decrease P, & decrease Q.
c. decrease D, decrease P, & decrease Q.
b. increase D, increase P, & increase Q.
d. decrease D, decrease P, & increase Q.
© 2007 Thomson South-Western