blanchard_ch03

Qxd 62209 856 am page 79 problems and applications 21

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Unformatted text preview: lain your answer. b. Why would home owners hold off trying to sell? 22. G.M. Cuts Production for Quarter General Motors cut its fourth-quarter production schedule by 10 percent on Tuesday as a tightening credit market caused sales at the Ford Motor Company, Chrysler and even Toyota to decline in August. … Bob Carter, group vice president for Toyota Motor Sales USA, said … dealerships were still seeing fewer potential customers browsing the lots. The New York Times, September 5, 2007 Explain whether this news clip illustrates a. A change in supply b. A change in the quantity supplied c. A change in demand d. A change in the quantity demanded 23. The figure illustrates the market for pizza. Price (dollars per pizza) 16. What features of the world market for crude oil make it a competitive market? 17. The money price of a textbook is $90 and the money price of the Wii game Super Mario Galaxy is $45. a. What is the opportunity cost of a textbook in terms of the Wii game? b. What is the relative price of the Wii game in terms of textbooks? 18. The price of gasoline has increased during the past year. a. Explain why the law of demand applies to gasoline just as it does to all other goods and services. b. Explain how the substitution effect influences gasoline purchases and provide some examples of substitutions that people might make when the price of gasoline rises and other things remain the same. c. Explain how the income effect influences gasoline purchases and provide some examples of the income effects that might occur when the price of gasoline rises and other things remain the same. 19. Classify the following pairs of goods and services as substitutes, complements, substitutes in production, or complements in production. a. Bottled water and health club memberships b. French fries and baked potatoes c. Leather purses and leather shoes d. SUVs and pickup trucks e. Diet coke and regular coke f. Low-fat milk and cream 20. Think about the demand for the three popu...
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This note was uploaded on 04/04/2012 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue.

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