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V CHAPTER 3
1.1 Answers will vary, but may include examples such as: Bill Gates and Paul Allen with Microsoft;
2.1 (a) Anderson (household) is supplying his labor in an input market, and the county courthouse
3.1 Since the jerseys do have slight differences (team name and logo, player name and number, etc.),
3.2 (a) A change in consumer expectations changes demand. Julio expects the price of tires to
3.3 (a)
(b)
(c)
(d)
(e)
3.4 Tastes and Preferences could be one of the determinants of demand that may have influenced the
4.1
Quantity supplied by:
Price Firm A Firm B Firm C Firm D Firm E Market
$25 5 3 2 0 5 15
4.2 (a) This sequence confuses changes in supply (shifts of the supply curve) with changes in
(b) This sequence confuses changes in supply and demand with changes in quantity supplied and
5.1
(e)
43,651
5.2 (a)
(b) It depends on whether demand responds to the lower price and by how much. The diagram in (a)
(c) The price system was not allowed to work to ration the San Francisco tickets. Some other
5.3 (a) Disagree. They are complements.
Philadelphia game
San Francisco game
26,163
41,915
MC0
MC1 = MSC
Units of output
Price per unit ($)
0
p0
q0
Tax = MDC
q1
p1
(b) Agree
(d) Disagree. Sure they can. Both steak and lobster are normal goods.
(e) Disagree. Price could go down if the shift of supply was larger than the shift of demand.
(f) Agree.
5.4 If the price of tobacco is supported by limiting land used to grow it, then the supply curve for
5.5 (a) See diagram below.
(b) Price would fall until the quantity demanded and the quantity supplied were equal at some
(c) Quantity demanded would drop but the new units put up for sale would stay the same and the
(d) The only way that the inventory of unsold new homes will shrink is if more new homes are
5.6
5.7
(a)
Price
Quantity
Demanded
(in Millions)
Quantity Supplied
(in Millions)
$.50 90 30
(c)
5.8 (a)
(b) Critics believe that the supply curve for low-income housing looks like this:
5.9 (a)
5.10 The growing demand for Quinoa has resulted in a decrease in demand for brown rice, shifting the
Quantity of brown rice
Q1Q0
0
D0
D1
Price of brown rice
5.11 The equilibrium price is $50 and the equilibrium quantity is 12 keyboards.If the market price is
5.12 The demand curve for newspapers in Baltimore might shift to the right if income levels in the
P1
P0
