ECO-9-17-Ch4-Week-4

ECO-9-17-Ch4-Week-4 - Economics:ClassNotesChapter4 TheMethod

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Economics: Class Notes Chapter 4 17/09/2007 10:36:00 The Method Who is DIRECTLY affected? How does behavior change? What is the result? Examples: Oranges, Orange Juice, Tomato Juice  Suppose a horrible cold front kills of 40% of the orange crop.  Everything else  held constant… this will cause the equilibrium price to ______ and the  equilibrium amount sold to ______. o The sellers are the ones effected.  Their ability to sell has decreased.  Less to sell so supply decreases. o There becomes a  shortage  at the original price.  The quantity demand  starts going down because its to expensive, and the quantity supply  goes up because companies want to sell more at the new higher price. o New equilibrium price is set higher then original equilibrium price. Suppose a horrible cold front kills of 40% of the orange crop.  Everything else  held constant, this will cause the equilibrium price of  orange juice  to _______  and the equilibrium quantity sold to ______. o The sellers are directly effected.  Oranges are an  input  into the  production of orange juice.
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o Cost of other inputs goes up, and people don’t want to supply as much  so supply decreases.   o The market works exactly the same way as oranges and the  equilibrium price goes up. Suppose orange juice and tomato juice are substitute goods. Suppose further  that there is a cold front that kills off 40% of the orange crop. Everything else  held constant this will cause the equilibrium price of tomato juice to _______  and the equilibrium quantity of tomato juice to ________. o Buyer is directly effected. If the price of one substitute good goes up.  The demand for the other goes up. o
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This note was uploaded on 01/16/2012 for the course ECON 2000 taught by Professor Roussell during the Fall '06 term at LSU.

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ECO-9-17-Ch4-Week-4 - Economics:ClassNotesChapter4 TheMethod

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