Chapter 3: Q 21. (page 78)
What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the
supply curve for milk.
Short Answer
1
Chapter 3: Q 21. (page 78)
What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the
supply curve for milk.
1
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Get started for freeWill supply curves have the same shape in all
markets? If not, how will they differ?
Does a price ceiling change the equilibrium price?
Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil. In each case, state how the event will affect the supply and demand diagram. Create a sketch of the diagram if necessary.
a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon.
b. The winter is exceptionally cold.
c. A major discovery of new oil is made off the coast of Norway.
d. The economies of some major oil-using nations, like Japan, slow down.
e. A war in the Middle East disrupts oil-pumping schedules.
f. Landlords install additional insulation in buildings.
g. The price of solar energy falls dramatically.
h. Chemical companies invent a new, popular kind of plastic made from oil
We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically?
Review Figure 3.4. Suppose the government decided that, since gasoline is a necessity, its price should be legally capped at $1.30 per gallon. What do you anticipate would be the outcome in the gasoline market?
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