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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Most government policy decisions have winners
and losers. What are the effects of raising the minimum wage? It is more complex than simply producers lose and workers gain. Who are the winners and who are the losers, and what exactly do they win and lose? To what extent does the policy change achieve its goals?
Let’s think about the market for air travel. From August 2014 to January 2015, the price of jet fuel increased
roughly 47%. Using the four-step analysis, how do you think this fuel price increase affected the equilibrium price
and quantity of air travel?
The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each.
(a) A rise in demand
(b) A fall in demand
(c) A rise in supply
(d) A fall in supply
Consider the demand for hamburgers. If the price
of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburgers? Why or why not? Illustrate your answer with a graph.
Does a price ceiling increase or decrease the number of transactions in a market? Why? What about a price floor?
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