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True False (True Answer )812 If demand decreases and supply increases, the direction of change in the equilibrium quantity is unpredictable unless the relative magnitudes of the demand and supply changes are known. True (True Answer )False 813 Explain the law of demand. What does it tell us about the shape of a demand curve? The law of demand states that when all other variables are held constant, a higher price of a good will tend to decrease the quantity demanded of that good. Graphically we see this as a downward-sloping demand curve.
814 Why are economists so particular about the difference between an increase in “quantity demanded” and an increase in “demand”? Aren't they the same thing?No, they are not the same thing. An increase in the quantity demanded implies a downward movement along a given demand curve. The price has fallen and the quantity demanded has increased. An increase in demand implies that the entire demand curve has shifted rightward. This means that at all prices the quantity demanded has increased.815 A small private college increases tuition while a large public university in the same state does not. What will happen to the demand (enrollment) for both schools? The small college is likely to see a decrease in the quantity demanded for college education at the school. This would be seen as a movement upward along the demand curve. If students see the two schools as substitutes, the demand curve would shift rightward for the large public university.816 How would each of the following events affect the demand for new textbooks? a) The price of a used textbook rises. b) The price of college tuition rises. c) More high school graduates decide to attend college. a) A used textbook is a substitute for a new textbook. When the used book becomes more expensive, the demand for a new book increases. b) A college course is a complement with a new textbook. If the price of attending college is rising, the demand for a new textbook decreases. c) More students in college is an increase in the number of consumers for new textbooks. This increases the demand for books (both new and used).817 Suppose the supply curve for soap bubbles has a slope of +1 and intersects the vertical axis at a price of $2 per bottle. Interpret the meaning of both the y-intercept and the slope. The y-intercept at $2 tells us that there will be zero bottles supplied at prices of $2 and below. In other words, the price must rise above $2 for any bottles to be supplied. The slope of +1 tells us that if the price rises $1, one more bottle of soap bubbles will be supplied.
818 How would each of the following events affect the supply of compact cars? a) The price of steel rises. b) The production technology for car manufacturing improves.