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Chapter 3: Q. 13 (page 78)
What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
Buyers will demand less.
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Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following two changes.
(a) Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price.
(b) The city eliminates a tax that it placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by .
| Price per pound | Qd | Qs |
|---|---|---|
| \(5.00 | 26 | 16 |
| \)6.00 | 24 | 18 |
| \(7.00 | 22 | 20 |
| \)8.00 | 21 | 21 |
| $9.00 | 20 | 22 |
Name some factors that can cause a shift in the demand curve in markets for goods and services.
A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will be the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at ? At ? At ?
| Price | Qd | Qs |
|---|---|---|
| \)1.60 | 9,000 | 5,000 |
| \(2.00 | 8,500 | 5,500 |
| \)2.40 | 8,000 | 6,400 |
| \(2.80 | 7,500 | 7,500 |
| \)3.20 | 7,000 | 9,000 |
| \(3.60 | 6,500 | 11,000 |
| \)4.00 | 6,000 | 15,000 |
What is total surplus? How is it illustrated on a
demand and supply diagram?
Will demand curves have the same exact shape in
all markets? If not, how will they differ?
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