Problem Set 4(CH4).docx - Problem Set 4(CH4 KWONG Wing Kai 20513986 Problem and Applications(2,3,4,7 Q2 In general the statement is false It is because

Problem Set 4(CH4).docx - Problem Set 4(CH4 KWONG Wing Kai...

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Problem Set 4 (CH4) KWONG Wing Kai 20513986 Problem and Applications (2,3,4,7) Q2. In general, the statement is false. It is because the increase in demand for notebooks results in an increased supply of quantity. The statement would only be true if the supply curve was a vertical line. Q3. a) The people decide to have more children would tend to buy a larger van since they need more seats and space in their car, so that, the demand of the minivan would increase, but the supply would not be affected. As a result, there would be a rise in both the price and the quantity sold. b) The cost of producing a minivan would increase and the supply of minivans may decrease, yet, the demand would not be affected. As a result, there would be a rise in the price of minivans and a decline in the quantity sold. c) The engineers develop new automated machinery for the production of minivans would contribute to the improvement of technology, by doing so, there will be an increase in supply as the cost of production is reduced and demand is not affected. As a result, there would be a decline in the price of minivans and a rise in the quantity sold.
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