Explain how the price of oil can rise even though

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Unformatted text preview: ight have 9160335_CH03_p053-080.qxd 6/22/09 8:56 AM Page 78 CHAPTER 3 Demand and Supply 78 changed demand and/or supply and shifted the demand curve and/or the supply curve to cause the price to rise? 9. “As more people buy computers, the demand for Internet service increases and the price of Internet service decreases. The fall in the price of Internet service decreases the supply of Internet service.” Is this statement true or false? Explain. 10. The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car rises. (iii) All speed limits on highways are abolished. (iv) Robots cut car production costs. Which of these events will increase or decrease (state which occurs) a. The demand for gasoline? b. The supply of gasoline? c. The quantity of gasoline demanded? d. The quantity of gasoline supplied? 11. The demand and supply schedules for gum are Price (cents per pack) a. b. c. d. e. Quantity demanded Quantity supplied (millions of packs a week) 20 180 60 40 140 100 60 100 140 80 60 180 100 20 220 Draw a graph of the gum market, label the axes and the curves, and mark in the equilibrium price and quantity. Suppose that the price of gum is 70¢ a pack. Describe the situation in the gum market and explain how the price adjusts. Suppose that the price of gum is 30¢ a pack. Describe the situation in the gum market and explain how the price adjusts. A fire destroys some factories that produce gum and the quantity of gum supplied decreases by 40 million packs a week at each price. Explain what happens in the market for gum and illustrate the changes on your graph. If at the time the fire occurs in d, there is an increase in the teenage population, which increases the quantity of gum demanded by 40 million packs a week at each price, what are the new equilibrium price and quantity of gum? Illustrate these changes in your graph. 12. Eurostar Boosted by Da Vinci Code Eurostar, the train service linking London to Paris … , said on Wednesday first-half sales rose 6 per cent, boosted by devotees of the blockbuster Da Vinci movie. CNN, July 26, 2...
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