Section+Exercise+4+solns-1 - 2011 ,Berkeley Doraiswamy...

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Department of Economics               Spring  2011 University of California, Berkeley         Economics 1    Head GSI: Swetha  Doraiswamy Section Exercise 4 1. Explain whether each of the following events represents (i) a  shift  of the demand curve or  (ii) movement along  the demand curve.  a. A store owner finds that customers are willing to pay more for umbrellas on rainy days. The quantity of umbrellas demanded is higher at any given price on a rainy day than on a  dry day. This is a rightward  shift  of the demand curve, since at any given price the quantity  demanded rises. This implies that any specific quantity can now be sold at a higher price. b. When XYZ Telecom, a long-distance telephone service provider, offered reduced rates on  weekends, the volume of weekend calling increased sharply. The quantity of weekend calls demanded rises in response to a price reduction. This is a 
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This note was uploaded on 04/26/2011 for the course ECON 1 taught by Professor Martholney during the Fall '08 term at Berkeley.

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Section+Exercise+4+solns-1 - 2011 ,Berkeley Doraiswamy...

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