EC111Class2Answers

EC111Class2Answers - UNIVERSITY OF ESSEX DEPARTMENT OF...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
UNIVERSITY OF ESSEX Autumn Term 2011/12 DEPARTMENT OF ECONOMICS Tim Hatton EC111 Introduction to Economics: Class Exercises 2 Outline Answers 1 (a) Shift along the demand curve Shift of the demand curve (b) (i) (left). If beef is a substitute, a fall in its price causes consumers to demand less pork at each price. So the demand curve for pork shifts to the right, price and quantity falls. Q 1 Q 2 Q P P 1 Q 1 Q 2 Q P P 1 P 2 Q 2 Q 1 Q P P 2 P 1 Q 2 Q 1 Q P P 1 P 2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
producers are willing to supply less at each price. So the supply curve shifts to the left, the price increases and the quantity falls. (iii) If pork is a normal good then the demand curve will shift to the right when consumers’ income increases. But if it is an inferior good the demand curve would shift to the left. (iv) ‘Innovation’ means more efficient methods of production, which reduces the cost per unit. The supply curve shifts to the right; equilibrium price falls and quantity increases. Q
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/15/2012 for the course EC 111 taught by Professor Timhatton during the Spring '12 term at Uni. Essex.

Page1 / 4

EC111Class2Answers - UNIVERSITY OF ESSEX DEPARTMENT OF...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online