Week 1 - Answers - Week 1 Answers See pp. 17-20 1. Does a...

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Unformatted text preview: Week 1 Answers See pp. 17-20 1. Does a change in consumers tastes lead to a movement along the demand curve or a shift in the demand curve? A change in consumers' tastes leads to a shift of the demand curve. 2. Does a change in price lead to a movement along the demand curve or a shift in the demand curve? A change in price leads to a movement along the demand curve. See pp. 23-26 3. Does a change in producers technology lead to a movement along the supply curve or a shift in the supply curve? A change in producers' technology leads to a shift in the supply curve. 4. Does a change in price lead to a movement along the supply curve or a shift in the supply curve? A change in price leads to a movement along the supply curve. See pp. 18-19 5. Beer and pizza are complements because they are often enjoyed together. When the price of beer r ises, what happens to the supply, demand, quantity supplied, quantity demanded, and price of pizza? (Graph) When the price of beer rises, the demand for pizza declines, because beer and pizza are complements and people want to buy less beer. When we say the demand for pizza declines, we mean that the demand curve for pizza shifts to the left as in the figure below. The supply curve for pizza is not affected. With a shift to the left in the demand curve, the equilibrium price and quantity both decline, as the figure shows. Thus, the quantity of pizza supplied and demanded both fall. In sum, supply is unchanged, demand is decreased, quantity supplied declines, quantity demanded declines, and the price falls ....
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This note was uploaded on 06/20/2011 for the course ECON 211 taught by Professor Morrison during the Spring '10 term at Wayne State University.

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Week 1 - Answers - Week 1 Answers See pp. 17-20 1. Does a...

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