Solution to Chapter 3(odd)

Solution to Chapter 3(odd) - Chapter 3 1)a) b) c) d) e) 3....

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Chapter 3 1)a) b) c) d)
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e) 3. If the supply of new homes kept pace with the expanding demand, prices would remain constant. The supply curve shifts to the right at the same rate as the demand curve shifts to the right:
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5. If the price of tobacco is supported by limiting land used to grow it, then the supply curve for tobacco shifts to the left. The anti-smoking publicity works to shift the demand curve to the left. Both of these policies work together to reduce consumption of tobacco. 7. (a) This sequence confuses changes in demand (shifts of the demand curve) with changes in quantity demanded (movements along a demand curve). First, a demand shift does cause price to rise. As price rises, the quantity supplied increases along the supply curve, and the quantity demanded declines along the new demand curve as the market moves to reestablish equilibrium. Nothing here suggests that demand shifts back down, or that prices will fall back to their original levels. (b)
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This note was uploaded on 10/04/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas.

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Solution to Chapter 3(odd) - Chapter 3 1)a) b) c) d) e) 3....

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