{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

hw ch 3 1-16 - TA Ergin Bayrak ECON 203 September 9 2005...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
TA: Ergin Bayrak ECON 203 September 9, 2005 Chapter 3 Homework #1-16 1. The Law of Demand is a fundamental characteristic of demand behavior. Other things equal, as price increases, the corresponding quantity demanded falls and visa versa. There is an inverse relationship between price and quantity demanded. The demand curve is downward sloping because of the law of demand—people buy more of a produce, service, or resource as its price falls. The determinants of demand include tastes, number of buyers, income, prices of related goods, and expectations. A favorable change in consumer tastes, an increase in the number of buyers, rise in income, increase in the price of a substitute good or decrease in the price of a complementary good, and consumer expectation of higher prices or incomes in the future cause an increase in the demand curve. The opposites of the above listed would cause a decrease in the demand curve. A change in demand is a shift in the demand curve and a change in the quantity demanded is a movement along the demand curve from one point to another; it is caused by a price change. 2. a. Produce B becomes more fashionable: Increase in demand b. The price of substitute product C falls: Decrease in demand. c. Income declines and product B is an inferior good: Increase in demand. d. Consumers anticipate that the price of B will be lower in the near future: Decrease in demand . e. The price of complementary good D falls: Increase in demand. 3. a. Airline tickets: Decrease in demand. b. Gasoline: Increase in demand. c. Hotel rooms: Decrease in Demand. d. American flags: Increase in demand. e. Books about Afghanistan: Increase in demand. f. Arabic interpreters: Increase in demand. 4. The law of supply states that as price increases, the quantity supplied increases and visa versa. Producers will produce and sell more of their product at a high price than at a low price. There is a direct relationship between price and quantity supplied. This direct relationship shows an upward sloping supply curve.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern